Short-Term Forex Technical Outlook: GBP/JPY

Risk aversion paired with narrowing demands for carry trades pushed the GBPJPY to its lowest level in over a decade, and the downward trend is likely to hold as we head into the New Year as investors continue to curb their appetite for risk.

Currency Pair: GBP/JPY

Chart: 60 Min Charts

Short-Term Bias: Bearish

Analysis

Risk aversion paired with narrowing demands for carry trades pushed the GBPJPY to its lowest level in over a decade, and the downward trend is likely to hold as we head into the New Year as investors continue to curb their appetite for risk. Increased selling pressures dragged the pair to a fresh low for the month as it slipped to 132.01 on 12/22, signaling that traders remain bearish against the pound-yen. As the pair continues to test for support, I anticipate the pair to move lower over the near-term, and we may see the GBPJPY work its way down towards the 4/10/95 low of 127.03 over the coming weeks.

However, as markets remain thin throughout the end of this year, trading under these circumstances are highly unfavorable, and investors may wish to wait until the New Year to resume trading.

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