GBP/JPY Forecast 06/11: Pound Eyes ¥214 Breakout (Video)

(MENAFN- Daily Forex) The British pound has dropped a bit against the Japanese yen on Thursday, but as we head into the weekend, the question will be whether or not we are going to see a return to the carry trade.

GBP/JPY

The British pound has pulled back just a touch against the Japanese yen in early trading on Friday, as the ¥214 level has offered a bit of a barrier. The ¥214 level is an area that we'll be watching very closely because, if we can break above there, then I think the pound goes looking toward the ¥216.50 level.

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Short-term pullbacks here should see plenty of support. The ¥212 level would be a likely candidate, as it is an area that has been both support and resistance. The 50-day EMA is rising a bit, and it is trying to cross above the 200-day EMA to kick off the so-called golden cross. We'll have to wait and see if that ends up being the case, with buyers jumping in as well. I think it does make a certain amount of sense.

The interest rate differential still favors the British pound by a wide margin.

As long as we can stay above the moving averages, I think it's likely that, sooner or later, buyers come in and pick up cheap British pounds. In fact, you get paid at the end of every day quite a bit to do so, and we are starting to see that play out.

EURUSD Chart by TradingView

There was an ascending triangle that just got broken-a sloppy one, mind you-but you can make an argument that we could be looking at a move to about ¥219, or you could take a look at the double bottom, and that reads for a move to about ¥216

So, it really just comes down to how you want to read this chart. But either way, getting paid at the end of every day makes a huge difference over the longer term, and traders will be wise to pay attention to that.

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