The British pound initially rallied a bit during the course of the trading session on Tuesday but gave back the gains to reach towards the ¥152.50 level. By doing so, it looks as if the market is trying to figure out where to go next, and perhaps whether or not we are going to have some type of risk appetite going forward. The market breaking down below the ¥152.50 level opens up the possibility of a move towards the ¥150 level, which of course is a large, round, psychologically important figure that will attract a lot of headlines. With that in mind, I think it will be difficult to break down below there, but if we do then things get rather ugly.
GBP/JPY Video 14.07.21
Keep in mind this pair is highly sensitive to risk appetite, so that makes quite a bit of sense that as things are starting to get a little bit shaky around the world, that we are grinding lower. To the upside, the ¥155 level extends all the way to the ¥156 level as far as resistance is concerned. If we break above there, then the market is likely to continue going much higher on a longer-term uptrend that could last several months going forward.
That being said, it looks very unlikely to happen easily, and we would obviously need to see some type of major turnaround when it comes to general risk appetite. We would need to see something very big happened to make that a reality. At this point, I think it is much more likely to see a grind lower than anything else.
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