GBP/JPY Forecast: Spikes Against the Yen but Shows Hesitation

• The GBP/USD has been showing strength against the Japanese yen in recent trading sessions, with the market spiking above the ¥168 level.
• Although gains were given back, the market remains bullish, and short-term pullbacks could offer buying opportunities.
• Eventually, the market may try to find its way to the ¥170 level.

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It is important to note that the Bank of Japan continues to employ yield curve control, meaning that it will have to print more Japanese yen every time we get closer to the 50-basis point level in the 10-year yield. This could lead to problems for the yen and be bearish for the currency.

Underneath, the ¥165 level should be an area of psychological support, followed by the 50-Day EMA near the ¥163.50 level, which is rising and an indicator that many people pay close attention to. If the market breaks down below this level, it opens the possibility of a move down to the ¥160 level, where we have recently seen significant support.

Monitor the Bond Markets

Overall, this is a “buy on the dip” type of situation, and traders should be looking for upside opportunities. The British pound has been one of the better-performing currencies this year, and the market remains bullish against the Japanese yen. After all, there are a lot of central banks around the world that are at least staying somewhat tight, but the Bank of Japan continues to see a need for quantitative easing. This makes for a “perfect setup” for a lot of fundamental traders around the world.

It is important to monitor what is going on in the bond markets, as they dictate what the Bank of Japan will have to do. If the Bank of Japan continues to employ yield curve control and prints more Japanese yen, it could be bearish for the currency and lead to a spike in the British pound against the yen.

At the end of the day, traders should be looking for buying opportunities in the British pound against the Japanese yen, as the market remains bullish. Short-term pullbacks could provide these opportunities, and traders should be cautious of the psychological support levels at ¥165 and the 50-Day EMA near the ¥163.50 level. Monitoring the bond markets and the actions of the Bank of Japan is also crucial for predicting future movements in the market.

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