- The British pound extended its broader bullish tone against the yen, with recent sessions confirming strong upward momentum.
- Support and resistance levels remain well-defined, while interest rate differentials and risk appetite continue to underpin longer-term upside bias.
The British pound initially fell against the Japanese yen during the trading session here on Thursday but at this point it looks as if it is a market that continues to see a lot of upward trajectory and of course we need to keep in mind that the Wednesday session was a big huge victory for the British pound and it looks like we tried to roll that back but then turned around to show a confirmation of the strength.
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If we can break above the high of both Wednesday and Thursday, then we have the British pound reaching towards the 210 yen level over the longer term. If we break it down, I think the 205 yen level will end up being a significant support level, as it was previous resistance. All things being equal, you do get paid at the end of every day to hang on to this pair. So, I think the interest rate differential continues to be a major factor.
Interest Rate Dynamics and Long-Term Bias
Especially as the Bank of Japan has almost no real serious possibility of tightening monetary policy of any significant note, while the British pound, despite the fact that the Bank of England came very close to cutting rates, still has a larger interest rate behind it. And therefore, I think you've got a situation where over the longer term, we should continue to just levitate here. Furthermore, you also have to keep in mind that there is a risk appetite factor here, and traders typically will buy this pair when they feel more risk on than risk-averse, and of course vice versa. I like buying dips here. I think we go higher.
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