The British pound initially dipped slightly to kick off the trading session on Friday but as you can see, we have turned around to break much higher. We started the move above the ¥138 level, and it now seems as if we are ready to go much higher given enough time. Ultimately, the ¥140 level will be targeted but we may need to pullback ever so slightly in order to find value. I like the idea of buying the pair on dips, because we are clearly trying to change the overall trend when it comes to the British pound on the whole. It has been one of the best performers lately, and there is nothing on this chart that suggests it will not continue to be so.
GBP/JPY Video 03.08.20
The size of the candlestick is relatively strong, but it is the overall momentum that I like. Furthermore, we have installed the US dollar gain against the Japanese yen, bouncing from a major support level. This should continue to weaken the Japanese yen overall so that should of course be positive for this pair also. As long as traders are willing to overlook the Brexit situation, it makes quite a bit of sense that we should continue to see the British pound go much higher as it is historically cheap against most currencies.
The GBP/JPY pair is also sensitive to the risk appetite of traders around the world, so that is most certainly something to pay attention to as well. With this, things look good and I think they continue to grind higher. That being said, ¥140 will probably cause some type of psychological resistance.
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