The British pound initially tried to rally during the session on Tuesday, but found the 147.75 level to be resistive, and then we rolled over to fall 100 pips. However, the main driver of this would have been Monetary Policy Committee member Broadbent failing to mention anything about a hawkish situation coming out of the Bank of England. This through a bit of a shock into the market, but when you look at the longer-term chart you can see that we are grinding towards the upside longer term, so I think that it’s only a matter of time before the buyers get involved. Once they do, the market should then go looking for the highs again, and then eventually the 150 level which is my longer-term target. I believe in buying dips, and I think this will in the end simply be another one of the steps that people take advantage of and look at as a potential value play.
The Japanese yen
While the British pound of course has its own problems, the reality is that the Japanese yen is plagued by the Bank of Japan, keep in an ultralow and ultra easy monetary policy going forward. This continues the way upon the Japanese yen and I think will for the next several years. In fact, most traders who have been around for several years will tell you that this is the norm, people sell the Japanese yen and by higher-yielding currencies. I think we are starting to see the market is trying to normalize overall, and this pair will be any different. This pair is highly sensitive to risk appetite though, so the stock markets have a significant amount of influence as to where this pair goes next, as people look for higher-yielding currencies in a “risk on” environment.
GBP/JPY Video 12.7.17
This article was originally posted on FX Empire