The British pound has rallied significantly against the Japanese yen, perhaps in a sign of more of a “risk on” behavior around the world. With the FOMC coming out later in the day, it could give traders more of a reason to take on riskier assets, because the Federal Reserve encourages this behavior through loose monetary policy. That means that most currency should do fairly well against the Japanese yen, however there is a little bit of a drag with these related currency is because the US dollar is in fact losing against it and currencies are typically measured for strength against the greenback.
GBP/JPY Video 30.07.20
I do like the idea of buying this pair on a breakout above the ¥137 level, or on short-term pullbacks. I think that we will eventually go looking towards the ¥139 level, followed by the ¥140 level. It is more than likely just a matter of time but as the GBP/USD pair approaches the 1.30 level, you could probably see some form of profit-taking, and that might cause a short-term pullback here due to the pound losing a little bit of strength. Ultimately though, it is only a matter of time and I think that the ¥135 level is essentially the “floor” in the market. The resiliency of this pair should not be ignored, as it has clearly put everyone on notice that the British pound is going to continue to rally. That being said, if we can get a push higher in the stock markets around the world, that tends to help this pair as well.
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This article was originally posted on FX Empire
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