Short-term pullbacks are more than likely to be buying opportunities, as the pair has seen a lot of pressure to the upside. Remember, you get paid to hold this pair.
GBP/JPY
During the trading session on Tuesday, we have seen a lot of volatility and a lot of noise, but one thing that I think that we are starting to see now is that the Japanese yen, despite being a safety currency, is going to continue to suffer overall.
The market is currently above the 212 yen level and if we could continue to go to the upside from there, and I think we probably do eventually, the 214 yen level is your next area of serious problems. Short-term pullbacks I think are buying opportunities and you may get them because there's so many headlines out there that could throw the markets around.
Risk Appetite and Fundamental Pressures
Keep in mind, I think we've got a couple of things going on here. Risk appetite is coming back over the last couple of days while the Japanese have very serious problem with a lack of oil being particularly brutal in Japan. With this, oil is going to be a potential problem for the Japanese.
With that and the fact that you get interest rates working for you to the upside, that makes quite a bit of sense that you could get paid swap at the end of every day. It softens some of that blow and then eventually by the time you get to where you're going you've actually increased your profits. If we were to break down below the 209 yen level, then it might be time to reset. In that environment, value hunters will be attracted to price drops at this point in time.