The British pound pulled back rather significantly against the Japanese yen during the trading session on Friday, perhaps taking a bit of a breather in what has been a very strong move to the upside. The ¥142.50 level was tested, and that we pulled back from it. I think at this point though, there are plenty of buyers underneath that will take advantage of a potential support level all the way down to the ¥140 level. That being the case, the market is likely to continue to see noisy behavior, which will be especially true in a pair like this.
GBP/JPY Video 18.01.21
Keep in mind that the pair does tend to be sensitive to risk appetite in general, so do not be surprised at all to see this go back and forth with stock markets and the like. Ultimately, this is a market that I think continues to be a “buy on the dips” type of scenario, as the British pound is still historically cheap, and therefore there should be a bit of a pushback towards the upside again, given enough time. The ¥140 level is an area that should attract a certain amount of attention, and therefore I would be very interested in buying this market down at that area on some type of bounce.
The 50 day EMA is approaching that level as well, so that of course can come into play as well. I have no interest in shorting this pair, at least not anytime soon but do recognize that the macroeconomic picture is a very fluid one at the moment.
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