British pound continues the bounce around against Japanese yen

The British pound went back and forth during the trading session on Monday, as traders came back to work from the weekend. It looks as if the ¥149 level is offering a bit of support, but the question remains whether we can hold that level to test major resistance above. · FX Empire

Christopher Lewis

Updated Mon, May 21, 2018, 9:53 PM

The British pound has been very choppy during the trading session on Monday, using the ¥149 level as support. It’s possible that the market could break down below there, and if it does I think we will probably go looking towards the ¥148.50 level. However, I look at this as a market that is trying to build up enough momentum to break above the ¥150 level, an area of massive resistance. If we can get above that level, it’s likely that the market could continue to go much higher, and I think it would send a major buy signal to longer-term traders around the world.

The uptrend line underneath continues offer a lot of support, somewhere near the ¥147.50 level. Ultimately, this is a market that I think will continue to be very noisy, but that’s nothing unusual for this pair. While the British pound has been getting hammered against the US dollar, the reality is that the Japanese yen is very soft due to the interest rate differential and of course the Bank of England looking likely to raise interest rates over the next year or so helps this pair rally also. There is a risk sensitivity to this pair, so keep that in mind. If the stock markets rally significantly, that could also offer a reason to start buying, and again, if we can break above the ¥150 level, that should open up significant upside momentum in this pair.