GBP/JPY Forecast Today - 09/07: Pound Dominates Yen (Chart)

(MENAFN- Daily Forex)

• I can see that the
  GBP/JPY pair is going to continue to be positive, which of course makes a lot of sense considering that you've seen a lot of interest rate differential come into play, and it looks like the bulk of traders out there willing to hang on to this pair.
• I know I certainly am and will continue to hold the British pound over the Japanese yen, because of the massive interest rate differential.

Short-term pullbacks at this point in time should be a nice buying opportunity, as it gives us an opportunity to pick up“cheap pounds”, and of course continue to collect that swap at the end of every day. With this being said, it's also worth noting that the interest rate differential is quite large, and I suspect that there is no real argument to make for it changing anytime soon. Quite frankly, even if the Bank of England did cut rates, the interest rate is still wide enough to drive a truck through, and as long as that's going to be the case, you get paid at the end of every day to hang on to this pair.

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I have no interest in shorting this market because I am not willing to pay to do so. I believe that there are several areas of support underneath, not the least of which would be the ¥205 level, and then again at the ¥200 level. The ¥200 level is also backed up by the 50-Day EMA, which of course is a technical indicator that a lot of people will be paying attention to way trade

I believe that unless something changes quite drastically, this will continue to be a“one-way trade”, as the market has been so bullish that even if we were to pull back, you would have to assume that sooner or later the buyers would come in and try to pick up any type of value that presents itself. As things stand right now, I don't even have a scenario where I am going to short the GBP/JPY pair.

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