The British pound has rallied quite significantly against the Japanese yen after initially pulling back to the ¥135 level. By doing so, it then found enough momentum after it was announced that Boris Johnson had struck a deal with the European Union to reach all the way to the ¥141 level. We have given back some of those gains though, as the uncertainty is still a major fact as the UK Parliament is set to vote over the weekend and several members have already suggested that the DUP wasn’t going to go along with the deal. If that’s the case, we could open up Monday down several hundred pips.
GBP/JPY Video 21.10.19
All things being equal, if we can break above the top of the candle stick for the week then the market is likely to go looking towards the ¥145 level. Keep in mind that this pair is not only driven by Brexit but it’s also driven by overall risk appetite. Right now, risk appetite is somewhat reasonable, so that does help but things could change at the drop of a hat. To the downside, the ¥135 level should be supportive, but quite frankly even the ¥137 level could be as well. While the market could sell off due to a lack of Parliament agreeing to the deal, there is likelihood of buyers underneath based upon value at this point. The market is a bit overbought on shorter-term charts, so don’t be surprised if we fall.
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This article was originally posted on FX Empire
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