The British pound rolled over a bit during the week, as the Japanese yen is favored when things are a bit dicey. Right now, there are plenty of reasons to think that perhaps the market participants will continue to pay attention to stock markets and the like as they don’t look that healthy. That doesn’t mean that they are mounting down, just simply that it’s easier to be short of a market that is so sensitive to global macro environments.
GBP/JPY Video 17.06.19
Beyond that, we have the Brexit and that of course can cause a lot of noise. That weighs upon the British pound, and even though the British pound has shown signs of trying to stabilize against the US dollar, that probably features the Federal Reserve more than anything else. Remember, the Japanese yen is the ultimate safety currency. If you are nervous about having money in British assets, and of course you don’t know how the Brexit is going to turn out, it makes perfect sense to see wanting to own Japan and its assets.
If we break down below the lows of the previous week’s candle, which is essentially the ¥136.50 level, then it opens the door to the ¥135 level. Otherwise, I would look for a bit of back and forth choppiness that probably features more of a shorter-term type of trading environment. We could go as high as ¥140 though, so keep in mind that potential a scenario in more of a “risk on” attitude seen around the world.
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This article was originally posted on FX Empire
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