GBP/JPY rallied significantly on Tuesday, showing signs of life again

The British pound has rallied a bit during the trading session on Tuesday against the Japanese yen as equity markets rallied a bit. That of course helps risk appetite in general, and that should send pairs like this higher. However, I think that the upside is probably limited as we have the jobs number on Friday, and that can have a major influence on where markets go overall for the next several sessions. The attitude of market participants continues to be very skittish, as trade war fears continue to be a major problem. This pair will be especially sensitive to those headlines, as money tends to flow towards the Japanese yen when people fear economic issues. I think that this will continue to be the case over the next several sessions as headlines could change things in an instant.

After the announcement on Friday, it’s likely that we will see some type of significant move, and at that point I think we might get a bit more clarity when it comes to where we are heading to. The 1.4850 level underneath should be supportive, a breakdown below there could send the market down to the 147.50 level. The alternate scenario of course is that we break above the 150.50 level, which should send the market towards the 155 handle above. I think that the volatility continues to be a major issue, but we probably won’t get the true measure of where we are going next until after the vital employment figures are released.