The British pound rallied during the week, breaking above the ¥132 level in a sign of strength. However, there is a lot of noise between here and the ¥135 level, so I think it is only a matter of time before we see some type of pushback. Keep in mind that the market has faced a lot of support underneath in order to bounce yet again. However, the most recent bounce before the one we are in now is lower, so that does suggest that perhaps there is still a lot of shorting going on out there.
GBP/JPY Video 01.06.20
The market has been rather tight as of late, so at this point I think we are waiting for a large impulsive candlestick in order to take some type of trade on. At this point, I believe that simply waiting to see where the risk in the world is will tell you what this pair should do. Quite frankly, I believe that the Japanese yen is considered to be “safer” than the British pound because not only do we have global issues, but we also have to worry about the Brexit which is not going anywhere, and we do in fact have to get through a slew of headlines that could cause major issues in that scenario.
With that in mind, I think it is more than likely going to be a scenario where we get a lot of choppy volatility, but I think the road higher is going to be difficult to achieve. A break above the ¥135 level could get this market moving to the upside quite quickly though.
For a look at all of today’s economic events, check out our economic calendar.