The British pound has initially tried to rally during the trading session on Thursday but gave back quite a bit of the gains at the ¥145 level. That’s an area that should continue to be important, because it is a large, round, psychologically significant figure. However, if we can break above that level, then the market could go looking towards the ¥148 level. All things being equal, I do think we get there but it looks as if the market probably needs to build up the necessary momentum to get there.
GBP/JPY Video 21.02.20
Furthermore, this is a pair that is very risk sensitive, so you should pay attention to what the risk appetite around the world is. Right now, it seems to be a bit skittish but one of the things that has helped lift the Japanese yen related pairs is that the Japanese economy continues to struggle in general. Having said that, if we were to break above the top of the candlestick for the trading session on Thursday, then it will accelerate the move to the upside. At this point, even though I think the market probably pulls back, I will be looking for buying opportunities closer to the 50 day EMA underneath.
Expect a lot of volatility, but I do think that the market is starting to show its strength, so it’s going to take some massive change for this market to break down. The ¥140 level underneath should continue to be a bit of a floor, so breaking down below there could change a lot of things.