Created on December 26, 2024

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• The British pound initially did try to rally during the trading session on Tuesday, but gave back gains and we are essentially closing pretty much flat.
• It does make a certain amount of sense that the market would do very little as we are facing a cluster of resistance.
• This is an area that I think would continue to be a massive barrier and headache unless we get a lot of yen selling across the board.

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The fact that the liquidity wouldn’t have been there comes into play as well. That being said, despite the fact that the British pound isn’t necessarily a currency I love, it’s not the worst one out there. And the worst one out there might actually be the Japanese yen, maybe the Swiss franc. It’s kind of a tossup at this point. You could even throw the euro into that group.

Big Support Level Under Here

So, I do think then if we get a little bit of a pullback, it’s probably worth paying close attention to the ¥195 level, which is an area that’s a large round, psychologically significant figure, an area that’s seen some market action previously. And an area that the 50 day EMA is rapidly approaching. If it can break above the ¥195 level, then the short term technical flaw will just simply move up with that 50 day EMA.

On the upside, we have the ¥200 level, which has been like a brick wall for the British pound. But if and when we finally break above there, it’s likely that we would see this GBP/JPY pair really start to take off to the upside, perhaps driving the British pound all the way up to the ¥208 level, which of course was the recent swing high. I have no interest in buying the yen, which means I have no interest in shorting this pair.

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