Friday, 02 June 2023 07:31 GMT

GBP/JPY Forecast: The Dragon Continues To Sit On Support

(MENAFN- Daily Forex)
  • The gbp/jpy pair experienced a drop during Wednesday's trading session, only to find buyers again, indicating the presence of ongoing support levels.
  • The British pound has been facing fluctuations and testing support levels that have remained in focus for several days.
  • These movements reflect the market's uncertainty and indecision as it grapples with the evolving economic landscape.

Advertisement test out your technical skills now! open a free demo account A Bullish Trend for the British Pound Becomes Apparent

One significant factor influencing the market's direction is the interest rate differential, which international bodies such as the Bank of Japan influence. To counter rising interest rates in its domestic bond market, the Bank of Japan has actively printed the Japanese yen, effectively decreasing its value. This has had a ripple effect across the Forex world, impacting the value dynamics of various currencies.

Upon analyzing the chart, a bullish trend for the British pound against the yen becomes apparent, discouraging immediate shorting strategies. The occasional pullbacks present attractive opportunities for buyers, with the ¥170 level as a significant support threshold, reinforced by psychological market biases. Traders have taken advantage of these opportunities throughout the session, particularly after disappointing PMI figures globally.

On the flip side, the ¥172.50 mark represents a formidable resistance barrier . It could trigger further buying, potentially propelling the pound-yen pair toward the ¥175 level if breached. Market psychology might perceive this level as an obstacle, establishing additional psychological resistance.

The prevailing market sentiment suggests persistent volatility, with buyers ready to seize every dip. The lack of substantial reasons for a sustained downward push by sellers exacerbates this uncertainty, making shorting strategies less favorable in the near term. However, this would be completely flipped around if the Bank of Japan were to reverse its monetary policy program of quantitative easing suddenly.

In this volatile landscape, the market is expected to remain noisy. However, traders should remain vigilant for potential value opportunities, as the ability to identify and leverage them will likely be a key theme in this market. As the British pound continues to navigate these turbulent waters, the primary strategy should be to seek value and adapt to evolving market conditions.

In conclusion, during Wednesday's trading session, the GBP/JPY pair experienced fluctuations and tested support levels. The interest rate differential and the Bank of Japan's actions have influenced the market's direction, creating a bullish trend for the British pound against the yen. While volatility remains persistent, buyers are ready to seize opportunities, making shorting strategies less favorable.

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