GBP/JPY Price Forecast – British pound falls hard

The British pound has fallen a bit during the trading session on Friday, breaking below the ¥143 level again. This wipes out the bullish pressure and relief rally that we had seen due to Teresa May being able to survive a no-confidence vote. We are now focusing on the longer-term negativity of the Brexit and the lack of agreement between Teresa May and Parliament, meaning that the British pound will continue to fall from here. This is a very bearish candle stick, and I think it probably foretells more downward pressure towards the vital ¥140 level.

GBP/JPY  Video 17.12.18

That’s not to say that the market won’t be able to rally occasionally, certainly it will. However, as you can see by the yellow ellipse on the chart, I have pointed out where I thought a lot of bearish pressure would start to pick up. We touched the bottom of it, and then rolled right over. I suspect that any hint of positivity from that relief rally is now over, and we will start to focus on headlines coming out of the EU and the UK again. In other words, expect algorithm based trades with every new headline. The pattern that has worked for quite some time though is every time we rally, you simply fade it, continuing to sell the British pound overall, and against pretty much every other currency out there. The Japanese yen is considered to be a safety currency, and as the US/China trade war continues and Chinese economic numbers haven’t been that great, it makes sense that there’s more of a “risk off” move here as well. Fading rallies continues to work.