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British Pound Rally starts to Look Tired against the Yen


The British pound has climbed higher against the safe haven Japanese yen headed into Friday Asian trade session. The benchmark GBP/JPY currency exchange rate is looking to extend gains made yesterday after the Bank of England’s monetary policy and interest rate decision.

As expected the Bank of England made no change with monetary policy. The Old Lady left interest rates and monthly asset purchases as is for September. However, the British central bank signaled that a rate hike could happen as soon as February 2022.

The Bank of England also raised inflation forecasts for 2022. Today, Germany is publishing monthly business expectations and their monthly current assessment survey. Ifo will also release their monthly German business climate index.

Japan has no economic data scheduled for release overnight into Saturday and the United States will publish monthly housing sales data. The U.S. will also see weekly crude oil numbers from Baker Hughes.

Daily British Pound Technical Analysis (GBP/JPY)

Looking at the above daily MT 4 price action chart, the British pound is trading above 151.40 yen and challenging the fifty (50) day simple moving average as well as a falling trend line in play since June.

Near term technical resistance is at the 50 day simple moving average and falling trend line near 151.50 yen. The next upside barrier lines up at 152 yen with the 100 day simple moving average in play near 152.85 yen. This is also the 14 September high price point.  The 13 July high price point lines up at 153.48 yen.

The 14 day relative strength index (RSI) is steady above the mid-point near 51. This could be a signal that the GBP/JPY Forex market could be running out of steam.

Price action could consolidate a bit before making a move. Technical support is in play at 150 yen with the next downside barrier coming into focus at 149.88/87 yen.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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