The British pound has rallied during the course of the week to break slightly above the ¥150 level before giving back some of the gains. This is not a huge surprise considering how parabolic this market has gotten, it of course the fact that the ¥150 level would be a large, round, psychologically significant figure that people would be looking to take profits that. That being said, even if we do pull back from here, I would not be a seller of this pair. It is obvious that it is extraordinarily bullish, and I think there are several areas underneath that could in fact offer buying opportunities.
GBP/JPY Video 01.03.21
All that being said, I do think that if we can find a pullback towards the ¥147.50 level or maybe even the ¥145 level there would be plenty of buyers willing to step in and pick the market back up. After all, the British pound is historically cheap and of course is pair is highly sensitive to the overall risk appetite around the world. As it appears that the market believes that we are entering a major reflation trade for the post pandemic world, and then should continue to work against the value of the Japanese yen in general. The British pound of course being a beneficiary of the vaccination program in the UK also has an influence, so at this point I believe that buying dips continues to work going forward and we will eventually break above that ¥150 barrier to continue going much higher. In fact, if and when we do, we should go looking towards ¥155 next.
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This article was originally posted on FX Empire