The pound sterling rose in the European market on Friday against a basket of global currencies, continuing to expand its gains for the fourth day in a row against the Japanese yen, as it recorded its highest level in 16 years, and approached trading above the important psychological barrier of 200 yen for the first time since 2008. This is in light of the continued acceleration of the sale of the Japanese currency in the foreign exchange market.
Interest rate differences between the United Kingdom and Japan enhance the gains of the British currency, and these differences are expected to continue for a long period, which strengthens British interest rates and supports the continued rise of the pound sterling against the Japanese yen.
Price outlook: Then the exchange rate of the pound sterling against the Japanese yen rose by 0.7% to 196.09 yen, the highest level since 2008, coming from the opening price of today’s trading at 194.76 yen, and recorded the lowest level at 194.33 yen.
Yesterday, the British pound recorded an increase of 0.6% against the Japanese yen, the third daily increase in a row, as a result of renewed concerns about the current gap in interest rates between the United Kingdom and Japan.
Open sales of the Japanese yen against a basket of major and minor currencies are currently continuing in the foreign exchange market, especially with growing doubts about the intervention of the Japanese authorities to support the local currency against excessive weakness.
The results of the Central Bank of Japan’s monetary policy meeting, which were less aggressive than expected, increased confidence in the continuation of selling operations for the Japanese yen. These results have reduced the chances of a new increase in Japanese interest rates this year.
Expectations about the performance of the British pound against the Japanese yen
On the other hand, the Bank of Japan is not seen as likely to implement any additional interest rate increases this year. Although the Bank of Japan raised interest rates for the first time in 17 years last March, the commitment of policymakers to slow down the implementation of further increases has affected the yen, especially with the wide yield gap between Japan and advanced economies.
Expectations about the performance of the British pound against the Japanese yen:
1. We expect the British pound to continue moving in the positive zone against the Japanese yen, and the next target could be at the 200 yen per pound barrier.
2. If the Japanese government does not effectively intervene in the foreign exchange market, the yen is expected to continue moving in negative territory due to the wide interest rate gap between Japan and advanced economies.
1. Bullish expectations for the British pound: The British pound may continue to rise against the Japanese yen due to positive expectations regarding the British economy and increased demand for the British currency. The pound may rise further to levels not reached in years.
2. Potential impact of Japanese government intervention: If the Japanese government actually intervenes in the foreign exchange market by purchasing the Japanese yen, the pound sterling may decline against the Japanese yen. This intervention can affect the movement of the currency significantly.
3. The continuing impact of the interest rate gap: The wide interest rate gap between Japan and other countries may continue to affect the performance of the Japanese yen, which enhances the possibility of its continued decline against other currencies.
4. Global economic and political factors: Global economic and political factors affecting the performance of the British pound and the Japanese yen, such as trade tensions, geopolitical developments, and movements in global stock markets, should also be monitored.
Analysis of the British Pound and Japanese Yen currency pair
Expected scenario:
The pair’s price succeeded in maintaining its upward path despite some key indicators indicating negative momentum. The pair tested additional support at 194.35, then witnessed a strong upward bounce, making several gains to reach around 195.35.
The price is expected to face difficulty in forming new ascending waves during the current period, due to the formation of the resistance level at 195.45 for the extension of the main ascending channel. This calls us to take a neutral position for today’s trading and continue to monitor its movements, so that we can determine the expected direction for future trading. The stability of the resistance may activate the downward correction path, forcing the price to decline towards the 194.70 and 194.40 levels, while breaching the resistance may open a door to achieving new gains that may start from 195.80 and reach the next main target at the 196.38 level.
Expected Trading Range: The trading range is expected to range between the support level at $194.80 and the resistance level at $196.45.
Analysis of the pair’s price: Analysis of the pair’s price indicates the continuation of the upward trend, as the pair was able to maintain its upward path despite some negative indicators that provided some strong signals of negative momentum. It is noted that the pair tested the additional support level located at 194.35, and then witnessed a strong upward bounce, which led to achieving several gains reaching the 195.35 level.
The forecast for the performance of the British pound against the Japanese yen depends on a variety of economic and political factors, which must be carefully monitored to understand the future direction of the currency movement.
Trend forecast: Neutral
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