This pair of course is very sensitive to risk appetite in it seems as if the Japanese yen is suddenly acting like a safety currency again. Because of this, the market has sold off everything against the JPY over the last 24 hours, but this pair may have a bit of negative pressure put upon it by Boris Johnson suggesting that the United Kingdom needs to get a Canada style free-trade agreement with the EU, and it should be clear by June or he will walk away from the negotiations. At this point, it’s hard to tell how much that is affecting the price, but the reality is that the market is in a bit of a consolidation phase with the ¥141 level offering support anyway.
GBP/JPY Video 28.02.20
To the downside, I see the ¥140 level as psychologically important, so it is worth paying attention to. I think at this point we are sitting on top of massive support levels at not only the ¥141 level, the ¥140 level, but also the ¥139 level. In other words, there are a ton of buyers underneath waiting to step in at the first signs of good news. Most likely, we will bounce from somewhere near this area and try to reach towards the ¥145 level again as it would simply be a typical bounce around the consolidation area. If we were to break down below the ¥139 level, that would obviously be very negative but at this point that doesn’t look like the base case scenario.