The British pound has initially tried to rally during the trading session on Monday but has given back some of the gains to form a somewhat negative candlestick. That being said, it is probably more about the risk appetite of traders around the world than anything else. Furthermore, you need to keep in mind that Labor Day holiday was being celebrated in both the United States and Canada, so there is not much in the way of liquidity once the Europeans go home.
GBP/JPY Video 07.09.21
One thing that is worth paying attention to is the fact that there was a lot of selling pressure just above, so short-term pullback would make a certain amount of sense. To the downside, the ¥150 level would be a target from what I can see, as it is a large, round, psychologically significant figure and of course an area that a lot of people would be paying close attention to anyway due to the fact that traders in general will look towards the big figures as areas that large money probably comes back into the market. If we were to break down below the most recent low though, that for me that signifies that we are going much lower, perhaps due to some type of external influence, which of course is always a threat in this pair as it is so highly volatile.
I suspect that the next couple of days will be crucial in determining where we go next, and that is one of the most important things to keep in the back of your head. With this, I believe that the market has a lot of decisions to make over the next couple of days and therefore your position size should be relatively small to begin with.
For a look at all of today’s economic events, check out our economic calendar.