The British pound rallies against the Japanese yen on Wednesday

The British pound has rallied significantly during the session on Thursday, saving itself from some type of major unwinding against the Japanese yen, as the uptrend line has been validated, at least for the short term. As I look at this chart, the ¥150 level looks to be extraordinarily resistive, as it was previous support. If we break above that level, I think this market will rally significantly, perhaps reaching towards the ¥155 level. If we come back to the bottom of the chart and break below the short-term “double bottom” on the hourly chart, then we will probably break down to the ¥145 level.

The market is of course very sensitive to risk appetite around the world, but it is also sensitive to the GBP/USD pair, as it has recently tested a major uptrend line. So far, it looks as if the British pound is saving itself, but we have seen a significant amount of negativity as of late, especially as it looks like the Bank of England is going to sit with very low interest rates for a longer-term move. Ultimately, I think that this pair will be greatly influenced by the GBP/USD pair, so pay attention to that. As long as that market can continue to show signs of strength, this pair should follow right along with it. Otherwise, if we break down below the double bottom I think that the market will not only reach down to the ¥145 level, but rather quickly and probably sliced down through that level as well.