General presentation of the GBP/JPY currency pair:
Initially we shall take a close look at this particular currency pair on the Forex market and its particular characteristics.
The GBP/JPY currency pair represents of course the currency exchange rate between the sterling pound and the Japanese Yen. Basically, it expresses the value of a single sterling pound in Japanese Yen.
Concerning the basic currency of this currency pair it is therefore the sterling pound, also called the ‘cable’ in the trading world, which is currently the fourth most traded currency throughout the world. The issuing bank is the Bank of England, or BOE.
The GBP or sterling pound is often used as a reserve or safe currency and is characterised by a relatively high value compared to other major currencies.
Regarding the countering currency of the GBP/JPY currency pair, it is the Japanese Yen which is the third most traded currency on the foreign exchange market. It is the Bank of Japan, or BOJ, that is responsible for its issue and regulations.
The Japanese Yen has the particularity of being considered as a refuge currency as the Japanese economy displays a low inflation rate and a strong stability. It is also characterised by a relatively low value as compared to other major currencies, notably due to the fact that the interest rates are also relatively low. This currency is important, particularly for commercial operations and transactions in Asia and represents high transaction volumes.
It is also important to remember here that a low exchange rate of the Japanese national currency the Yen has always been historically favoured by the country’s government which wished to boost the country’s exports and thereby favour the country’s economy and its growth.
How to complete a technical analysis on the GBP/JPY currency pair exchange rate?
Apart from completing this crucial fundamental analysis on the GBP/JPY currency pair exchange rate it is of course also advisable to complete a technical analysis of this currency pair.
Here the technical analysis is a method of study and evaluation based on market dynamics which studies the historical rates.
The objective of the technical analysis is therefore to predict the rate dynamics of this currency pair in the future using certain tools called technical indicators which are in fact statistical type tools. There are various techniques and methods that exist for the calculation of this currency pair’s volatility, the strength of the trend and the probable trend reversal or acceleration levels. These include the Bollinger Bands, the support and resistance levels, the pivot points, the moving averages, and the RSI indicator among others.