The British pound tried to rally against the Japanese yen on Friday, in what would be thin trading. Risk appetite will continue to be a major factor.
GBP/JPY
The British pound rallied to kick off the Friday session but has drifted a little bit lower to show signs of hesitation. Ultimately this is a market that is continuing to see a lot of noisy behavior with the 210-yen level underneath being a major floor.
The 210-yen level is massive in its implications for short term traders as it has been both support and resistance and it is likely that this market will continue to see this as an important spot to find support. If that support gets broken it could open up a move down to the 208-yen level, possibly even the 207 yen level.
Risk Appetite and Central Bank Policy
To the upside we have the 213-yen level offering resistance right along with the 214-yen level. Keep in mind that this is a pair that is highly sensitive to risk appetite with the yen losing strength when times are good and the yen gaining strength when times are bad.
There are a lot of concerns out there to pay close attention to as traders will be focused on the headlines coming out of the Middle East and what that might do for risk appetite and of course interest rates around the world. The Bank of Japan is stuck in a situation where they cannot raise rates and therefore, they are a bit of an outlier at the moment.
The 50-day EMA sits right here as well and that might be something worth watching but quite frankly, I like the fact that this is a pair that gives you a decent swap at the end of the day and I like buying short term dips.