- The British pound has rallied a bit during the trading session on Tuesday against the Japanese yen, which does make a certain amount of sense considering we have been in an uptrend for some time.
- And of course, the interest rate differential between the 2 central banks is wide enough to drive a truck through.
- That being the case, it is an interesting pair to watch at the moment due to the fact that Wednesday should be a big session.
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Bank of England
We already know that the Bank of Japan has intervened recently, but at the end of the day, it’s very difficult to imagine a scenario where they can do that for a significant amount of time. They certainly can’t do anything interest rate wise, and therefore I think this is a market the continues to go higher because at this point in time, the market is likely to go looking to the top of the market, which could be as high as the ¥200 level.
If we do get some type of pullback as we head into the bank of England interest rate decision, that more likely than not willing that being a buying opportunity because even though the volatility may cause quite a few headaches in the short term, the reality is that even if the Bank of England to cut interest rates, which they are not expected to, it is still a carry trade just waiting to happen.
Underneath, we have the 50-Day EMA coming into the picture to offer support, and I think is something that you need to pay close attention to as it has been important times. With that being the case, could offer a bit of a “soft floor” in the market as we continue to see so much in the way of bullish pressure. I have no interest in shorting this market, and I recognize that we would have to break down below the ¥190 area to even remotely consider some type of trend change, and even then, you still would have to deal with the 200-Day EMA far below there.
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