The British pound rallied significantly during the trading week, reaching towards the ¥135 level. That’s a large, round, psychologically significant number as well, as a lot of money will be attracted to it. Beyond that, it is also the 38.2% Fibonacci retracement level which also has Fibonacci traders interested. That being said though, we don’t see any signs of exhaustion quite yet on longer-term charts and you should keep in mind that this pair is essentially going to be moving on risk appetite in general, and of course everything that’s going on with the entire Brexit situation.
GBP/JPY Video 16.09.19
Brexit will obviously make this a very noisy pair to trade, but it should be noted that we have gotten a bit ahead of ourselves and although it has been a nice bounce, it has not changed the overall trend out there and it’s likely that we will continue to see quite a bit of noise in this general vicinity. All it will take is some type of negative headline involving the Brexit to send this market right back down. Beyond that, we could also get negative influence coming from the US/China trade situation that could have people looking for the Japanese yen as well. All things being equal I think that this market continues to be very difficult in negative overall, but that bounce was probably overdue. Any sign of exhaustion will attract a lot of sellers, and of course fear could enter the market at any time. There is an upside scenario, but not without a huge move in the stock markets and perhaps even Brexit itself.
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This article was originally posted on FX Empire
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