The British pound has pulled back a bit during the trading session on Thursday, reaching down towards the ¥130 level before bouncing again. At this point, the market does look a little bit extended, and that could mean a move down towards the ¥130 level again, perhaps even breaking down below there. Alternately, if risk appetite picks up again, we could be looking at a move towards the ¥135 level given enough time. Beyond that, the ¥136.50 level would also be a major target of interest.
GBP/JPY Video 27.03.20
Keep in mind that this pair is very sensitive to risk appetite, so therefore it’s possible that the pair will move with the latest headline, especially in the environment that we find ourselves in. Ultimately, I think that the markets will remain skittish for the foreseeable future, and therefore it’s very likely that we will see a lot of noise when it comes to this market. Remember, the Japanese yen is a bit of a safety currency, and that does help this pair fall under those conditions anyway. The British pound of course has to worry about the situation between the United Kingdom and the EU, which of course will fire right back up as soon as we get past the virus issues. With that being the case, keep in mind that there is more likely going to be downward pressure than up over the longer term, so this of course is something that should be kept in mind. All things being equal, I like the idea of fading this market after signs of exhaustion. I do not want to buy although I recognize we could rally a bit further.