GBP/JPY Forecast: British Pound Continues to Grind Higher Against the Japanese Yen

• The British pound has rallied again during the trading session on Wednesday to reach the ¥199 level.
• The ¥199 level of course is a nice level II grab a headline or 2, but the reality is that the ¥200 level is what most traders are going to be paying attention to.
• This is mainly due to the fact that it was roughly where the Bank of Japan intervened again, and this of course had a major influence on action over the next several days.

Underneath, I think there are plenty of support levels people will be looking toward in order to find a little bit of value. I think at this point in time, the 50-Day EMA is important to pay close attention to, where it is currently sitting at the ¥193.50 level. The ¥195 level is an area where a lot of traders might be interested in picking up a bit of “cheap British pound” as well, but we will have to wait and see whether or not we even get that pullback.

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On the other hand, if we were to break above the ¥200 level, I think this opens up another leg higher, perhaps rushing in a lot of “FOMO trading” for traders to take advantage of. I don’t have any interest in shorting this market, because quite frankly it is far too strong, and of course the Japanese are stuck with their current monetary policy, and therefore I think you need to be very cautious with the idea of shorting this market, and it is worth noting that recently I’ve seen some well-respected pundits talking about shorting all of the yen related pairs, due to the fact that the Bank of Japan most certainly would have to change monetary policy. They have course, forgot to take into account that the massive debt find in Japan simply cannot be paid off with any type of interest at all.

Hanging On

At this point in time, I am hanging onto this pair regardless of what happens in the short term, just simply because I do get paid at the end of every day, and I think it makes a lot of sense to continue to take advantage of that aspect of trading. The swap will remain positive for a long time, even if we see the Bank of England start to loosen monetary policy.

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