GBP/JPY Price Forecast – British pound pulls back

The British pound broke higher during the trading session on Friday but turned around to show signs of exhaustion. I don’t know whether it is a market that is overextended or is it simply a market that needs to pullback in order to find support underneath. I believe the 140 young level is now support, extending towards the ¥141 level. That being the case, I think that pullbacks will be interesting for people who believe that the Brexit may be delayed, because that is going to be good for the British pound, at least in the short term. However, there are still a plethora of problems out there so I think that the 200 day EMA above could cause issues, pictured in black on my chart. If we break back below the ¥140 level, then we could go towards the ¥137 level. I expect a lot of volatility in this pair, and part of what will move it is the US/China situation, as this pair is so wrist sensitive anyway.

GBP/JPY  Video 21.01.19

I believe that we should get an opportunity to pick up this pair at lower levels on support though, because most of the reason for the short term pullback could simply be a function of it being Friday, and people not wanting to carry risk into the weekend. That being said, I would keep your position size a bit smaller than usual.

This article was originally posted on FX Empire

More From FXEMPIRE:

• Trump’s Plan to End Shutdown Rejected; GDP Could Lose as Much as Half Percentage Point

• AUD/USD Forex Technical Analysis – Rally Losing Upside Momentum, Could Break Sharply Under .7146

• EUR/USD Forex Technical Analysis – Drops on Treasury Yield Rise

• S&P 500 Weekly Price Forecast – stock markets rally to close out the week

• The Week Ahead – Brexit, the ECB, China GDP Numbers and Trade in Focus

• USD/JPY Forex Technical Analysis – Testing Short-Term Retracement Zone; Strengthens Over 110.452, Weakens Under 109.445