The British pound has initially fallen during the trading session on Thursday against the Japanese yen only to turn around a bounce from the ¥124 level. By the time the Americans jumped on board, the market had reached above the ¥127.50 level. That is a major turnaround and a strong sign that we are getting close to some type of significant “dead cat bounce.” This doesn’t mean that you should jump in and buy with both fists full of British pounds, but there could be an opportunity for a move towards the ¥130 level.
GBP/JPY Video 20.03.20
The British pound of course is historically cheap, and I do think that a certain amount of value hunting is going on right now and therefore I would not be surprised at all to see this market rally over the longer term in a huge move. Obviously, we are not there yet but it is something that you should keep in the back of your mind as it should be a nice “investment” going forward. That being said, I like the idea of holding onto a small position, and adding once the dust settles, but right now I think if you are trading with any size at all you will need to be very cautious, because quite frankly the headlines are quick to come out and cause panic with the algorithmic machine base trading that we see being such a major factor in the markets these days. Remember, these types of moves can go on much longer than you think, so it is something worth paying attention to.