GBP/JPY Forecast June 26, 2017, Technical Analysis

The GBP/JPY pair initially rally during the day on Friday, reaching towards the 142 handle. We pulled back from there, reaching down to the 141 handle as well. Ultimately, this is a market that looks like it’s trying to build up enough bullish pressure to go higher, but the volatility continues, especially as headlines come out of both the United Kingdom and the European Union. With the political jockeying and noise coming out of Maus across the newswires, the reality is that anything involving the British pound will be difficult. Ultimately, I think that the market has much more upside than downside, and part of the reaction that we saw during the day on Friday was the head of the EU Council Donald Tusk suggested that the UK offer for negotiations in the divorce are going to make things worse.
Simple noise
Obviously, the British pound falling due to that headline is an overreaction, as we are at the very beginning of the negotiation. Obviously, the Europeans are trying to jockey for a little bit of political leverage, but at the end of the day it doesn’t mean anything. With this, looks like the pullback will more than likely offer value that the longer-term and perhaps wiser trader will be looking to take advantage of. We are several months away from the final deal, so with this it’s likely that the market will come to grips with that idea, and perhaps attract more buyers. I have a target of 142.50 above, although it may take some time to get there. Adding on small dips will probably be the best way to go on short-term charts.