The British pound is set for move volatility against the Japanese yen currency as the Bank of England potentially starts to raise rates next month, while the Bank of Japan talked down rates and inflation during their recent monetary policy meeting.
Weakness in the British pound currency has been weighing on the GBPJPY pair this week, due to risk-off trading sentiment, and demand for the safe haven currency of choice, the Japanese yen.
However, weakness should not last for long, as the clear divergence between the Bank of Japan and the Bank of England could cause a clear rate differential trade, also known as the carry trade for the GBPJPY pair.
With the United Kingdom economy showing strong signs of rising inflationary pressures, as highlighted by the recent September CPI report, and rising energy prices, the differentials between both economies are becoming too hard for traders to ignore.
I believe with the fundamentals of these economies are diverging in a big way, and buying the GBPJPY at bargain levels, i.e. current trading levels could be a great play from now into year-end.
The ActivTrader Market Sentiment tool shows that some 84 percent of traders are bearish towards the GBPJPY pair right now. This goes strongly against the fundamentals, so do bare this in mind.
However, bearish sentiment does bode well for more gains in the GBPJPY pair as historical data has shown that fading one-sentiment skews amongst the retail crowd has proved to be lucrative.
GBPJPY Short-Term Technical Analysis
The four-hour time frame shows that the GBPJPY pair has formed a massive descending broadening expanding wedge pattern, which are amongst the most bullish patterns.
According to the size of the pattern, the wedge is located between the 154.50 to 157.40 price levels. Any dips towards the bottom of the wedge or 155.00 area could be a major buying opportunity. Overall, I expect a 300-point breakout at least once the pattern is broken.
See real-time quotes provided by our partner.
GBPJPY Medium-Term Technical Analysis
Looking at the daily time chart shows that the GBPJPY pair has invalidated a large head and shoulders pattern. The chart actually looks very similar to the CADJPY chart.
Buyers have repeatedly held the price above the top of the mentioned head and shoulders pattern. Interestingly, if bulls can hold the price above the 155.00 level then a powerful rally towards the 160.00 level should be expected.
See real-time quotes provided by our partner.
A comprehensive website for traders, both experienced and new! Checkout our content and learn how to invest and speculate in the markets using margin traded products. Our team of educators has extensive experience and is here to help. Enjoy!
© 2020 YouTrading UK - Leaders in Trader Training.
Cookie | Duration | Description |
---|---|---|
__cfduid | 1 month | The cookie is used by cdn services like CloudFare to identify individual clients behind a shared IP address and apply security settings on a per-client basis. It does not correspond to any user ID in the web application and does not store any personally identifiable information. |
_wpfuuid | 11 years | This cookie is used by the WPForms WordPress plugin. The cookie is used to allows the paid version of the plugin to connect entries by the same user and is used for some additional features like the Form Abandonment addon. |
cf_use_ob | This cookie is set by the provider Cloudflare content delivery network. This cookie is used for determining whether it should continue serving "Always Online" until the cookie expires. | |
cookielawinfo-checbox-analytics | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics". |
cookielawinfo-checbox-functional | 11 months | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". |
cookielawinfo-checbox-others | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other. |
cookielawinfo-checkbox-advertisement | 1 year | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement". |
cookielawinfo-checkbox-necessary | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary". |
cookielawinfo-checkbox-performance | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance". |
viewed_cookie_policy | 11 months | The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data. |
Cookie | Duration | Description |
---|---|---|
YSC | session | This cookies is set by Youtube and is used to track the views of embedded videos. |
Cookie | Duration | Description |
---|---|---|
_ga | 2 years | This cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors. |
_gid | 1 day | This cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form. |
Cookie | Duration | Description |
---|---|---|
_fbp | 3 months | This cookie is set by Facebook to deliver advertisement when they are on Facebook or a digital platform powered by Facebook advertising after visiting this website. |
fr | 3 months | The cookie is set by Facebook to show relevant advertisments to the users and measure and improve the advertisements. The cookie also tracks the behavior of the user across the web on sites that have Facebook pixel or Facebook social plugin. |
IDE | 1 year 24 days | Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This is used to present users with ads that are relevant to them according to the user profile. |
test_cookie | 15 minutes | This cookie is set by doubleclick.net. The purpose of the cookie is to determine if the user's browser supports cookies. |
VISITOR_INFO1_LIVE | 5 months 27 days | This cookie is set by Youtube. Used to track the information of the embedded YouTube videos on a website. |
Cookie | Duration | Description |
---|---|---|
_gat_UA-42160853-2 | 1 minute | No description |
cf_ob_info | No description | |
CONSENT | 16 years 8 months 3 days 6 hours 2 minutes | No description |