The British pound has drifted lower against the Japanese yen again during the day on Thursday, as we continue to see a lot of fears around the world when it comes to global growth and of course the virus situation. This is an obvious sign of “risk off” behavior, and therefore should continue as the downtrend has started to pick up again. Ultimately, this is a market that will continue to weigh risk appetite overall and reflect that risk in the price. The Japanese yen is considered to be a “safety currency”, so therefore it makes sense that traders would start reaching towards it and away from the British pound as not only is the Japanese yen a sign of safety but the British pound has a whole host of issues to worry about.
GBP/JPY Video 15.05.20
As the United Kingdom is locked down and just now starting to open up a bit, Japan has essentially been wide open the entire time. The infection rate in Japan is almost nothing, while the infection rate in the United Kingdom has been quite strong. Furthermore, there have been a lot of concerns about future problems in Great Britain, not the least of which will be Brexit. With that in mind, it makes quite a bit of sense that we will see this pair continue to drift lower over the longer term.
At this point, I anticipate that the ¥132 level will continue to offer resistance as we have seen of the last couple of days, being the previous support level. Ultimately, this is a pair that I do think will continue to look towards the lows and given enough time may very well reach them.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Has the Stock Downswing Started in Earnest?
- Crude Oil Price Forecast – Crude Oil Markets Continue to Grind Sideways
- EUR/USD Price Forecast – Euro Testing Support
- US Open – Waking From a Stimulus Induced Dream – Oil, Gold and BTC in Focus
- Silver Price Forecast – Silver Markets Reach Top of Range
- GBP/USD Price Forecast – British Pound Falls Against US Dollar Again