GBP/JPY Technical Analysis
About the GBP/JPY (British pound sterling and Japanese yen)
The GBP/JPY pair is the abbreviated term used for the Great British Pound and Japanese yen. the Great British Pound and Japanese yen, nicknamed as “Guppy” Before we get into the particulars, what exactly does GBP/JPY rate mean? The exchange rate tells you how many Japanese yen (the quote currency) are required to purchase one Pound (base currency). For example, if the pair is trading at 145.77, it means it takes 145.77 euros to buy 1 pound.
Breaking Down ‘GBP/JPY’
The pound sterling (symbol: £; ISO code: GBP), commonly known as the pound and less commonly referred to as sterling is the official currency of the United Kingdom At different times, the pound sterling was commodity money or bank notes backed by silver or gold, but it is currently Fiat money, backed only by the use of as little as possible in the areas where it is taken. The unit of the pound sterling is the world's most old money used in a country still in use and which has been in unbroken stretch use since its start.
Whereas, the Japanese Yen is classified as a safe haven currency. Before the financial crisis of 2008, several investors would take advantage of ultra-low interest rates from the Bank of Japan to borrow massively in Yen and invest the money abroad. However, the interest rate differential among the central banks of the BOE and Japan has squeezed significantly considering the global economic downturn, pointing to the unwinding of the carry trade as the value of the Yen rose.
The British Pound (GBP) vs. the Japanese Yen (JPY) is an extremely volatile pair. JPY is usually used as a funding currency of trade because it’s historically a low yielding currency. Since the UK is one of the substantial economies in Europe, the GBPJPY pair can be counted as a substitute for global economic health.
On the other hand, this pair acts like a representer for market 'risk-off' actions as the carry trade gets reversed. As a result, GBPJPY is capable to develop strong trends that exceed thousands of pips.
Correlation is merely a mutual relationship or connection between two or more things.
Positive correlation – The positive relationship merely is when pairs move in tandem with each other.
In the forex world, the GBP/USD, GBP/SGD, EUR/JPY currency pairs are positively correlated
Negative correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction, For example, USD/HUF, EUR/GBP, and USD/CAD
Gold & Japanese yen: This is why there is often a positive one connection between the Japanese money and gold: both properties are less than zero connection with the greenback and both are taken into account safe places of safety. however, the relation is not an error less connection, as one can see in the map under. This is because gold is not merely a that possibly taking place in addition to the U.S.dollar, but also to the current money-related system based on Fiat money used in countries. as an outcome of that, it some cases the Japanese money and the dollar both come out badly (or profit) get onto land against gold.
Economic Events: The movement in the Great British Pound and Japanese yen economic events determine the exchange rates. Top of the line economic events includes GDP, Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Great British Pound or the Japanese yen, causing fluctuations in the GBP/JPY exchange rate.
Major Economic Events
Gross Domestic Product – the gross domestic product is the central measure of economic growth in the region.
Employment Change – The Sterling is also sensitive to changes in employment, as slacks in the labor market causes a drop in Inflation rates.
Consumer Price Index – Since one of the goals of the BOP is to maintain price stability, they keep an eye on inflation indicators such as the CPI. If the annual CPI deviates from the central
Industrial Production – This measures a change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.
Political Events - Another critical factor is the political aspect. Instability, as seen in the Brexit referendum, can entirely change the direction of the currencies. So, stay up-to-date on the latest political and economic news.
What Determines the GBP/JPY Exchange Rate?
Several factors can impact the GBP/JPY rate valuation, including:
BOE & BOJ Monetary Policies: The Bank of England and Bank of Japan control the supply of money in the market, to keep the economy on track. A dovish policy, which is also known as expansionary policy, from either of the central banks, weakens the related currency. In contrast, a hawkish monetary policy (contractionary policy) strengthens the currency
The EUR/GBP is traded in amounts denominated in the US Dollar.
Standard lot Size: 100,000
Mini lot size: 10,000
One pip in decimals 0.0001
Pip Value: $8.97