The British pound has been back and forth during the week, reaching towards the ¥130 level that’s an area that should continue to cause resistance, as we have seen a lot of selling pressure there before. Beyond that, it’s a large, round, psychologically significant figure, and that of course will always come into play. We are in a downtrend, so it makes sense that there would be pressure there. All things being equal though, it’s difficult to imagine a scenario where we rally for a larger move.
GBP/JPY Video 02.09.19
The market has to deal with the Brexit, and as a result it makes sense that as we have no clarity in that deal, so at this point the British pound is something that you should be selling, not buying. That being said, if we can break above the previous week’s candle, then we could go rallying quite significantly towards the ¥135 level. At that point, I would not be a buyer but I would be looking for opportunities to sell this pair. Remember, not only do we have the Brexit to worry about, we have the global growth story and of course risk appetite situation as well. The Japanese yen typically get spot as a safety currency in those scenarios, so I think is very likely that we continue to see this market sell off every time there is a little bit of a bounce.
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This article was originally posted on FX Empire
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