- The British pound was fairly quiet during Friday’s trading session against the Japanese yen, but that could be just what it needed. Equally, this is a market that remains very interesting, mainly due to the fact that the Japanese yen is so hated at the moment.
- Furthermore, you have to be wary of the idea of the interest rate differential, as the British pound is certainly much healthier than the Japanese yen when it comes to that perspective. In other words, you’re getting paid to hold this pair overnight, and I think that still benefits Sterling down the road.
- However, it’s probably worth noting that the British pound has taken a bit of a beating against the US dollar recently, and that of course has little impact on this market.
Technical Analysis
The technical analysis for this GBP/JPY pair is somewhat sideways, and at the moment we are basically in the middle of a major consolidation level between the ¥190 level at the bottom and the ¥200 level at the top. That being said, I still favor the British pound over the Japanese yen, and it’s worth noting that the 50-day EMA sits in this area. Below, you have the 200-day EMA near the ¥193.50 level which is rising and may offer dynamic support.
Thursday’s candlestick was very ugly, but that was also when the British pound fell below the 1.25 level against the US dollar, and I think you’ll probably sort out most of the movement here as a reaction to that. That being said, I like the fact that the candlestick was very quiet on Friday, because it tells you that there is no lasting concern, at least not at this point. If that’s going to be the case, that’s the first part of the equation you need to get to in order to start buying on the jump.
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