The British pound has been negative over the week, testing the ¥145 level, an area that is rather supportive. I suspect that if we can break down below that level on a weekly close, then the market could unwind rather drastically. In the short term though, I think that what we are looking at is a market that is consolidating more than anything else, and quite frankly it’s difficult to imagine a scenario in which I would be willing to sell this market ahead of time. Keep in mind that there is a lot of demand just below the ¥145 level, and as we cannot close below that level, I suspect that eventually we could turn back around.

However, you need to see some type of good headlines coming out of the currency war, or perhaps the trade war to get this market moving to the upside as it is still risk sensitive. Because of that, I believe that the markets will eventually respond mainly to the news flow more than anything else. As we enter August, it is typically a very quiet time of year, and therefore I could see where the next couple of weeks could be very sideways for this pair. You should also keep in mind that the Brexit has a certain part to play against the British pound as well, causing a bit of a “double whammy” in this market.

GBP/JPY  Video 30.07.18

This article was originally posted on FX Empire

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