GBP/JPY Price Forecast – market rallies only to turn around

The British pound initially rallied against the Japanese yen, reaching towards the ¥148 level. The market has pulled back a bit to show signs of selling in that area, which is something that we have seen before. I think that the market breaking above there could eventually send this market towards the ¥150 level. That’s an area that obviously will have a lot of influence on the market, as it is a large come around, psychologically important number and of course an area where we had sold off drastically from previously.

The British pound is highly sensitive to risk appetite around the world so pay attention to headlines, which of course are a bit mixed at the moment. I believe that we are trying to break out to the upside, so look at pullbacks as potential buying opportunities. The ¥146.50 level underneath should be supportive, and therefore I think that a break down below there could open the door to the next psychologically important figure, in the form of the ¥145 level.

I would anticipate volatility, which of course is normal for this pair. I do like buying dips though in general, because it offers value in a market that seems to be trying to break out. However, I would point out that I am much more comfortable going long the EUR/JPY pair, which is one of my favorite pairs to use as a proxy for the risk appetite that you see in this market as currently the Euro is stronger than the Pound.