On Friday, the GBP/JPY was largely stagnant, fluctuating around the 1.25 region with no significant breakthroughs. The market is showing strong resistance at this level, which is unsurprising given its importance in the past. It is important to note that Friday was Good Friday, so many traders were absent from the market. Additionally, the Non-Farm Payroll announcement, which has a major influence on the market, was released during this period of low liquidity. It is likely that this will result in hesitation in the overall reaction to the announcement.
The Federal Reserve’s actions have had a significant impact on the US dollar, and the market is still questioning what its next move will be. It is worth noting that the British pound is currently overstretched, so a pullback may be imminent. If the pound drops below the 1.24 level, it is possible that it could fall further to the 50-Day EMA, which sits just above the 1.22 level. This of course could be an issue that occurs if we see the US dollar strengthen. The pound has been one of the best-performing currencies in the world this year.
It is important to exercise caution when trading during this period of low liquidity, as full liquidity will not be seen until the market reopens in the US on Monday. It is also crucial to recognize the potential significance of the Non-Farm Payroll announcement, as the market tries to determine what the Federal Reserve’s future actions may be. The employment situation will have a significant impact on the potential inflation we may see going forward. Friday was essentially a “throwaway day” due to the low liquidity, and we will have to wait until Monday to see what the market thinks of the Non-Farm Payroll announcement.
If the market were to break below the 1.24 level, the 50-Day EMA could become a target. However, if there is a significant daily close above the ¥125 level, it is likely that the British pound could go looking for the 1.2750 level. With that said, it is important to note that the British pound has shown strong resistance at the 1.25 level, so it may take a significant breakthrough to break above it. It is crucial to remain vigilant and cautious during this period of market uncertainty.