The British pound shot through the ¥130 level early in New York trading on Tuesday, an area that of course will attract a lot of attention as it is a large, round, psychologically significant figure. We have broken through there a couple of times recently but have seen sellers jump in every time we have traded above there. That being said, the market is likely to see a lot of volatility in this area, because these large, round, psychologically significant figures to attract a lot of attention. Furthermore, the risk appetite around the world is probably going to be something that moves in fluctuation rather rapidly, due to the headline risks out there. Having said that, the Federal Reserve opening up the spigot for liquidity certainly is helping a lot of risk appetite out there.
GBP/JPY Video 25.03.20
On the other side of the equation though is the fact that the British pound has gotten beaten down due to the fact that the United Kingdom may go on a very brutal lockdown soon. If that’s going to be the case, it obviously will have an effect on the currency. If the market breaks above the high of the trading session on Tuesday, then it’s likely that we go looking towards the ¥132.50 level, perhaps even the ¥135 level in the short term. Signs of exhaustion should be pounced upon, based upon the longer-term trend. That being said though, the market certainly looks as if it is getting ready to have a massive “bear market rally”, so having said that we could see a very sharp move higher before selling resumes.