GBP/JPY Forecast: Continues to See Support Against the JPY Just Below

• The GBP/JPY has seen some choppy trading against the Japanese Yen on Tuesday, with initial falls eventually being replaced with small gains.
• The pair is heavily influenced by risk sentiment in the markets and the monetary policies of both the Bank of Japan and the Bank of England.
• Currently, the Bank of Japan is trying to keep the yield curve below 50 basis points by purchasing bonds, and every time interest rates rise, pressure is placed on the yen to print more to buy bonds.
• On the other hand, the Bank of England has pledged to focus on inflation, which means the monetary policy will remain tight.

The 200-Day EMA is sitting just above the current price, and traders are keeping a close eye on it. However, at present, the moving averages are flat, which suggests that there is no significant trend in place. The market is likely to remain range bound as a result, but the overall trend remains bullish, as long as the trendline holds firm. Furthermore, it’s very likely that the Bank of Japan and its yield curve control also keep this market somewhat bullish, or at the very least - not very negative anytime soon.

Noise Ahead

The market is likely to encounter some resistance in the short term, with the ¥165 level looking like a significant ceiling for the pair. Traders should look for signs of exhaustion to start selling, but it's worth noting that the trendline at the ¥157.50 level is a long way from being broken.

It's important to keep an eye on the overall economic health of the world, as there are still many questions surrounding the recovery from the pandemic. The market is likely to be noisy, with traders needing to pay close attention to the risks and opportunities presented by risk sentiment and monetary policies. There are so many moving pieces currently that it should not be surprising at all that volatility continues to be a major issue in this pair, as well as many other currency pairs.

TLDR; the British Pound is likely to continue to see choppy trading against the Japanese Yen, as the market looks for direction. Traders should look for opportunities to sell as resistance levels are reached while keeping a close eye on the trendline at the ¥157.50 level, which is the key support for the overall trend.