GBP/JPY Forecast Video for 27.11.23
British Pound vs Japanese Yen Technical Analysis
The British pound has rallied significantly during the course of the trading session on Friday, as we have seen the market break to a fresh, new high. All things being equal, the Japanese yen remains on its back foot, and I think that will continue to be the case going forward. With this, the market is likely to continue to see buying opportunities on each dip, as the interest rate differential continues to favor the British pound against the Japanese yen, or for that matter, anything against the Japanese yen. At this point, I think the ¥187.25 level is going to continue to be an area of interest, and a pullback at this juncture is something that I am buying into.
The size of the candlestick is something worth paying attention to, as it does show a proclivity to favor more momentum. The size of the candlestick is impressive, and that typically means that there are plenty of people out there willing to get involved. That being said, I not only believe that we go to the ¥190 level eventually, I think eventually we even it ¥200. Quite frankly, the Bank of Japan is in the situation where it cannot change monetary policy very easily, as the debts burden coming out of Japan is far too substantial to pay higher interest rates on.
With this, I think it’s probably only a matter of time before each pullback it’s bought into and therefore I think you have to adopt that policy. The 50-Day EMA is near the ¥185 level, so at this point I suspect that is going to end up being the “floor in the market.” Anything below there would be concerning, but right now it would take nothing short of a Bank of Japan intervention to make that happen. Even then, I suspect that the market would be willing to pick up the pieces and start going long yet again. It’s not until Japan normalizes its monetary policy, or the rest of the world starts cutting rates, that this pair has any chance of dropping for a substantial move. That isn’t coming anytime soon.
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This article was originally posted on FX Empire