British Pound Reaching Towards Big Figure
The British pound has rallied significantly during the course of the trading session and breaking above the top of the highs of the last couple of days will continue to be something that we need to pay attention to. The ¥155 level is a large, round, psychologically significant figure that people will pay close attention to. If we do break above there, then it is an opportunity to go looking towards the highs again, but quite frankly this pair is too driven by risk appetite for me to be comfortable with it.
GBP/JPY Video 31.01.22
When you look around the world, you can see that risk appetite has been beaten down quite drastically, so it does make a certain amount of sense that we would see this pair struggle due to the fact that volatility numbers in the VXN (NASDAQ volatility index) still remains elevated, which generally does not lead itself to positivity. You can say the same thing about the VIX, and therefore it is probably only a matter of time before we see people running back to the safety currency such as the Japanese yen. Because of this, buying this market is difficult at this point, but it looks like we are having a significant relief rally in the short term.
To the downside, the 50 day EMA could offer support, just as the ¥152.50 level should be. If we do break out to the upside based upon some type of “risk on rally”, we could go looking towards the ¥157 level, where I would anticipate seeing pressure as well. Buckle up, this is going to continue to be a very volatile market and I think that is something that you should be prepared for by keeping your position small.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
