The British pound broke down a bit during the trading session on Friday, slicing through the ¥128 handle. By doing so, it looks as if we are ready to go a bit lower, and as we head into the weekend it makes quite a bit of sense that people would not be wanting to hold the British pound. As we have the Brexit still in the headlines, it’s likely that the British pound continues to struggle in general. I think at this point it’s likely that rallies should continue to be selling opportunities, as the ¥130 level has been important support, and now important resistance.
GBP/JPY Video 12.08.19
The pair is of course a proxy for risk appetite, and there doesn’t seem to be much out there right now. Ultimately, I like fading short-term rallies, aiming towards the ¥125 level. We are in a downtrend for a good reason, and as long as the Japanese yen remains a safety currency, then it makes sense that we continue to drop as there is so much uncertainty around the United Kingdom. Because we are not going to get much in the way of a “Brexit deal”, I believe that the British pound has further to fall, and we will of course see that continue to be the case going forward. Ultimately, I like fading rallies in this pair, and anything else that has the title “GBP” in it. If we did break above the ¥130 level, it’s possible that we could go looking towards the ¥132 level next.
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This article was originally posted on FX Empire
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