The GBP/JPY pair, like so many others, is going to be waiting to see what the Japanese have to say during the press conference early Friday morning.
GBP/JPY
The British pound has fallen during the trading session here on Thursday as the Bank of England chose not to raise rates. Although the Bank of England sounded like they were still relatively hawkish, it looks like the markets do not believe it. As a result, the British pound has fallen against most currencies.
Top Regulated Brokers
Overall, this is a market that continues to see questions asked of the Bank of Japan and what they may be doing at this juncture. After all, traders are trying to figure out whether or not they remain very hawkish, or if this is a one-and-done type of scenario.
The area just below current trading, right around the 206 yen level
This is a level that is important. It has been supported multiple times, and after all of this intervention that we have seen in the Japanese yen, this area is going to be watched very closely. After that, you have the ¥205 level. Anything below there, I think, solidifies the downtrend.
Overall, I think this is a scenario where the interest rate differential will continue to be a driver of this pair higher eventually. But we need to get through the Bank of Japan first, and we also need to see whether or not they blink. If they blink or sound like they are not completely dedicated to raising rates on a relatively steady basis, that could work against the value of the yen.
Holding this pair to the upside also pays you at the end of every day, and I think that is something that cannot be argued. It does not mean that it has to rally now, but I will be watching how it behaves after the announcement for the first few hours. If we can stay above ¥206, I think that is a good sign.
Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.