GBP rising or JPY falling?

How to work with this article?

Basic arguments

On the one hand, forward rates support a near-term GBP rising, and increased volatility supports GBP interest rates. On the other, JPY perspectives are not so bright. Nevertheless, the unemployment problem in the UK becomes worse, and it is already was proven by statistics, which is not so good as it was expected. It will definitely push GBP downwards.

Technical arguments

The current situation looks like a rollback, and according to the "wave" analysis can be interpreted as the end of an upward trend. The careful attention should be given to the wave number 5, which developed very fast and is ready to transform to a correction in the surge of statistics.

Big traders analysis

Picture 1

Picture 1. A price chart of GBPJPY and a chart of the indicator of big traders for the period of 15.09.2019 - 15.10.2019.

As we can see in picture 1, the positions of big traders significantly got lower to a local minimum before a sharp rising. However, the next increase was significant enough to break through the levels of resistance and make another round of a rising trend.

To sum it up

Investments in such currency assets as GBPJPY are definitely connected with an increased level of risk. The whole currency situation at this moment indicates the strengthening of JPY. Also, the majority of factors indicate that GBPJPY will move down. So, the most rational strategy in the current situation will be keeping an average ratio, such as 60% downwards and 40% upwards.

We recommend to use the following indicators for the most efficient market entry:

• SMA (Moving Average)
• RSI