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GBP/JPY Forecast: British Pound Continues to Find Buyers Against Yen

  • The British pound initially gap higher against the Japanese yen, only to turn around and fall.
  • However, this was just simply enough to fill the gap, and we have turned around to show signs of strength since then.
  • The ¥200 level above continues to have a lot of psychological importance in this market, and I think a lot of people will be paying close attention to it.
  • If we can break above the ¥200 level, then the market is likely to continue to go higher.

GBP/JPY Forecast Today - 11/06: GBP Buys vs Yen (Chart)

Underneath, we have plenty of support and I do think that buyers will continue to take advantage of the interest rate differential, which is quite large. This is a market that pays you quite handsomely at the end of every session, and until the Bank of Japan could actually change its monetary policy, there is no real hope for the Japanese yen. That being said, it is probably worth noting that Friday features the Bank of Japan and its interest rate decision, and although there is no real change expected, you could expect a little bit of noise due to the press conference that accompanies that announcement.

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    Buying On the Dips

    I think at this point in time, you continue to buy this pair on the dips, because the trend is most certainly your friend. If we can break above the recent highs near the ¥102 level, then it becomes a longer-term “buy-and-hold” type of situation. Underneath, the ¥197 level has offered short-term support, and underneath there we have the 50-Day EMA that comes into the picture to offer support. With this, I think you have got a scenario where traders are going to continue to look for value, and when and if they find it, they will take advantage of it.

    Keep in mind that volatility is a feature of this market and is not exactly rare. With that being the case, you need to be cautious, at least with your position sizing. It’s obvious that there’s only one direction that you can be trading this market, but a short-term correction could occur later in the week as traders are worried about the Bank of Japan doing something to jar the markets.

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    Christopher Lewis
    About Christopher Lewis

    Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

     

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