- The British pound has gone back and forth during the course of the trading session on Friday, as we’ve seen a lot of volatility in this pair.
Ultimately, we are getting close to a major ceiling, and therefore it does make a certain amount of sense that traders will continue to come in and push this market around. I would not underestimate the idea of the ¥200 level being a bit of a psychological barrier, and it’s obvious that the market is struggling the get above therefore a bigger move.
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That being said, you do get paid at the end of every day to hold despair, and I think the interest rate differential will continue to be a major driver of where we go next. After all, the Bank of Japan has no chance whatsoever of tighten monetary policy soon, mainly due to the fact that the Japanese have so much debt that they cannot afford higher interest rates. Remember, it wasn’t that long ago that almost all, and even during some days every single one, of the bonds on the Japanese markets were bought by the Bank of Japan, showing you just how ridiculous the monetary policy has been.
Technical Analysis
It’s worth noting that the market has been bullish for some time, so a little bit of a pullback here and there would not be a huge surprise. Quite frankly, the market cannot go up in the air forever, but if we can break above that ¥200 level on a daily close, I think it opens up more FOMO trading, perhaps sending the British pound toward the ¥203 level. As the market is like every other market that we are trading in these days, it’s all about momentum, and not necessarily about fundamentals. That being said, there’s no point in trying to fight this trend, because quite frankly you don’t want to be paying swap at the end of every day for the privilege to fight the overall attitude of the market.
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