The United Kingdom is facing a number of headwinds at the moment: rising energy prices, a shortage of migrant workers, and general supply chain issues due to COVID. However, the Bank of England is on a steeper rate path than the Bank of Japan and this should keep the GBP supported medium term against the JPY. Furthermore, the Bank of England is facing increasing inflationary pressures from rising price pressures in the UK. This means that the Bank of England may increase interest rates more quickly than anticipated if inflationary pressures keep building. This could support the GBP against the JPY over this month.

On Wednesday, the British Pound declined by 118 pips or 0.77% against the Japanese Yen. A breakout occurred through the lower boundary of an ascending channel pattern during Wednesday's trading session.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

 Given that a breakout has occurred, bearish traders may continue to pressure the exchange rate lower during the following trading session. The potential target for sellers will be near the 150.50 area. However, the exponential moving average 200 in the daily time frame at 151.02 could provide support for the GBP/JPY currency exchange rate within this session. The upside risk dominated GBPJPY currency pair on Tuesday as well. As a result, the British Pound edged higher by 126 pips or 0.83% against the Japanese Yen during yesterday's trading session.

As for the near future, the exchange rate could continue to edge higher in a narrow ascending channel pattern. The potential target for buyers will be near the 153.00 area.

However, the currency exchange rate could encounter resistance at 152.59 within this session.

GBPJPY

farhan fazal

Oct 07 2021