The British pound has initially pulled back during the trading session on Friday, but then turned around to show signs of life yet again. The British pound has been strong against the Japanese yen, as the Japanese economy is heading into recession. Furthermore, this is a market that is highly sensitive to risk appetite, so pay attention to how that’s working out. Ultimately, the market is likely to eventually break above the ¥145 level if the rest of the Japanese yen related pairs can rally as well.
GBP/JPY Video 24.02.20
At this point, it certainly seems to be a market that wants to go higher, but as we head into the weekend it’s a bit difficult to get overly excited. I anticipate that we could get a bit of a pullback, but the resiliency of the British pound should not be underestimated. After all, most of the truly concerning features of the Brexit situation have passed, and now it’s likely that we are going to see more attention paid to the idea of the negotiation situation between London and the EU.
Having said that, the British seem to be hanging on with more resiliency now, as the markets are likely to look at the British pound as being undervalued from a longer-term standpoint. Because of this, the market is continuing to push to the upside, but I think at this point short-term pullbacks should offer a buying opportunity. Breaking above the ¥145 level allows this market to go looking towards the ¥148 level. To the downside, the 50 day EMA will offer plenty of support as it is starting to turn higher.