GBP/JPY Forecast – British Pound Pulls Back to Major Figure
GBP/JPY Forecast Video for 25.01.23
British Pound vs Japanese Yen Technical Analysis
The British pound has fallen rather hard against the Japanese yen during trading on Tuesday, to reach down toward the ¥160 level. This is an area that could very well end up being support, as it is a large, round, psychologically significant figure, and we have seen have a little bit of an effect in this market previously. Having said that, you can also make the argument that we have sliced through it recently a couple of times, and we are in the midst of perhaps trying to form a massive “W pattern.” If that’s the case, then it makes sense that buyers will return sooner, rather than later.
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The 50-Day EMA sits just above, and it could offer a little bit of resistance at this point, and it does make a lot of sense that traders will be paying close attention to it. If we do break down below the ¥160 level, then it opens up the possibility of a move down to the ¥159 level, followed by the ¥157.50 level. Keep in mind that the Bank of Japan is still hell-bent on keeping interest rates on the 10 year note down to 50 basis points, so that means that they will be printing unlimited yen in order make that happen.
Because of this, I would anticipate that there is still a large amount of trader money out there willing to short against the Japanese yen. However, if the interest rates around the world continue to soften, that may provide the Bank of Japan with a little bit of cover for their operations and therefore may not see the melt off that we had seen previously.
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