- We can see that the British pound initially appreciated considerably against the Japanese yen, but then fell sharply.
- At one point it rose well above 201 yen, and the possibility of it reaching 202 yen is beginning to emerge.
- However, it then plummeted to below 200 yen, but rebounded again toward the end of the day.
Maybe some of this volatility is understandable because the Bank of Japan had its monetary policy meeting on Friday, but at the end of the day, this is more of a noisy situation than anything else and as a result, you have to look at the long-term trend, which is definitely to the upside and that’s why I’m trading in this market.
Do not short this pair
I have absolutely no interest in shorting this GBP/JPY market. I think that anyone shorting this market is probably trying to reverse course. Even if it goes down from here, I am very interested in the 50-day EMA near 197 yen. After that, I will be looking at the 195 yen level for no reason other than the psychological reasons of the numbers. Remember, there are rewards to be had for hanging on to this pair, which is why traders tend to flock there. I think we will continue to see a lot of buyers looking to eventually see a further rise, a breakout to the upside, and take advantage of the positive swaps that are such a big part of the British Pound to Japanese Yen trade. It’s a bit noisy, but at the end of the day, this is still a market that looks positive.
Ultimately, this is a currency pair that will be profitable at the end of every day and I think many will continue to benefit from that. The interest rate differential is so large you could drive a truck through it, so I think many will prefer the British pound over the Japanese yen and will continue to hold this currency pair for the long term.
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