GBP/JPY Forecast 06/01: Pound Seeks Support Vs. Yen (Chart)

(MENAFN- Daily Forex)

• The British pound was rather quiet during the trading session on Friday against the Japanese yen, but that might be exactly what it needed. All things being equal, this is a market that continues to be very interesting, mainly due to the fact that the Japanese yen is so hated at the moment.
• Furthermore, you need to keep an eye on the idea of interest rate differential, as the British pound certainly is much healthier than the Japanese yen when it comes to that perspective. In other words, you get paid to hang on to this pair overnight, and I think that continues to work in favor of Sterling along the way.
• However, it's probably worth noting that the British pound has recently taken a bit of a beating against the US dollar, and that of course has a bit of a knock on effect in this market.

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The technical analysis for this GBP/JPY pair is somewhat sideways, and at this juncture we are basically in the middle of a larger consolidation level between the ¥190 level in the bottom and the ¥200 level on the top. That being said, I still favor the British pound over the Japanese yen, and it is worth noting that the 50 Day EMA sits in this area. Underneath there, you have the 200 Day EMA near the ¥193.50 level that is rising and could offer dynamic support.

The candlestick on Thursday was very ugly, but that was also when the British pound broke down below the 1.25 level against the US dollar, and I suspect that you probably solve most of the move over here as a reaction to that. That being said, I like the fact that the Friday candlestick was very quiet, because it tells you that there isn't any lasting concern, at least not at the moment. If that's going to be the case, that's the first part of the equation that you need to have come about in order to start buying on a bounce.

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