The British pound initially tried to rally during the trading session on Friday but ran into a bit of trouble above the ¥135 level, which is also where the 38.2% Fibonacci retracement level resides. The large, round, psychologically significant figure of course will attract a lot of attention, but more importantly we need to pay attention to the risk appetite around the world, as this pair is highly sensitive to that. This is because the Japanese yen of course is a “safety currency” while the British pound has to deal with everything going on around the Brexit.
GBP/JPY Video 23.09.19
The Brexit is of course a moving target at this point, as the headlines will continue to cause issues. The likely Outlook changes from day to day, but at this point there’s a lot of uncertainty so it’s only a matter of time before the British pound reflects the uncertainty of the economy in the United Kingdom, and of course the entirety of the Brexit in general. A break down from here could send the market looking towards the 50 day EMA which is red on the chart, looking towards the ¥132 level. To the upside, the 200 day EMA is at roughly ¥137.50, which is also the 50% Fibonacci retracement level. In other words, even if we rally from here I’ll still be looking for an opportunity to sell this market. All things being equal though, it makes quite a bit of sense that the market continues to drift lower longer term.
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This article was originally posted on FX Empire
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