GBP/JPY (British Pound - Yen): trading characteristics and analysis methods

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The GBP/JPY currency pair is a highly volatile pair with good profit potential for experienced traders!

The GBP/JPY currency pair is considered one of the most beloved and popular among experienced Forex traders. High volatility allows you to apply aggressive and speculative strategies to complete transactions, thereby effectively increasing profits.

In order to hedge risks, you can consider the option of working with binary options for this pair - it is profitable and safe.

With a broker Finmax you have ample opportunities for comfortable and efficient trading.

The pound sterling to Japanese yen ratio shows how much the British currency is worth in terms of yen. And also the asset indicates the interconnection of two of the strongest economies in the world.

Japan and Great Britain are countries with a developed industrial sector, have high GDP rates, and are characterized by decent business activity. Not surprisingly, this tool attracts the attention of traders.

Analysis of the constituent parts of the GBP/JPY currency pair

The GBP/JPY currency pair is formed as a direct quote, in which the pound is the base element, and the yen is the quoted element. With the growth of the asset, there is a strengthening of the positions of the British currency against the Japanese, but if the exchange rate decreases, it means that the yen is strengthening.

The British pound performs the function of the national currency of Great Britain and all the territories and islands that are part of the state.

The Japanese yen is the official currency of Japan, issued by the Central Bank and serves as one of the world's reserve currencies.

In the share of the British economy, the leading place is occupied by the service sector, which accounts for 10 percent of the world total. In particular, banking, consulting, brokerage and programming services are in worldwide demand.

The industrial sector occupies the second significant place, and the country exports engineering products, cars, industrial and chemical products.

Features of behavior on the chart of the GBP/JPY currency pair

As trading practice shows, the "pound-yen" is not as easy to predict as we would like, since both currencies are highly susceptible to various political, economic and social phenomena and factors.

Within a trading day, the range of a pair can be up to 250 points, and this makes it possible for a wide range of traders to earn in a short time. In addition to the Forex market, this asset can be traded in the form of a classic futures, which is offered by regional exchanges, as well as a spot contract with a conversion option.

The currency pair has received the greatest distribution on the American and Asian trading floors.

The pound sterling-yen asset is attracting the attention of international banks and funds acting as market makers.

Among the key factors influencing the positions of the pair, the following should be identified:

  • Interest rates set by the British and Japanese Central Banks;
  • General market trend;
  • Japanese interventions;
  • US economic data;
  • World market news.

Due to its unpredictability and short temper, the GBP/JPY pair is often referred to as a dragon or a royal asset. It has aggressive trading signals with a wide price range of fluctuations, so it is not recommended for beginners to work, otherwise you can quickly drain the deposit.

The activity of the pair is observed in almost all trading sessions, while the trend can change dramatically after the publication of important or unforeseen news from the European Union, as well as from the East Asian region.

The data for Canada and the US also have some influence on the position of the exchange rate, since the countries of both currencies maintain strong economic ties with the American mainland.

On the basis of the monetary policy of each state, the dynamics of changes in the asset in the short term will be formed.

The British pound is considered a more expensive currency, since the rate of its regulator is quite rigid. And Japan is constantly struggling with deflation - the authorities have to keep the key rate at zero, to carry out interventions.

The Pound-Yen currency pair is traded in the carry trade mode - this is a capital saving technique when the key rate of one country is close to zero, and the second is a few percent.

In this case, it is advantageous to take a loan in yen and convert it into dollars or pounds sterling. Then buy bonds for this amount and form a deposit. But the main risk - a change in the market value - does not always make it possible to profitably conclude all transactions.

The GBP/JPY rate is strongly influenced by news and fundamental factors, and also always shows a vivid reaction to the macroeconomic and political factors of their states. The greatest correlation and similarity in behavior can be traced with the euro-yen pair.

Trading recommendations for working with the GBP/JPY currency pair

Among the key advantages of the asset, it is worth noting a small spread, a high level of volatility and the ability to conduct a large number of transactions within a trading day.

Due to the good turnover of both currencies, technical analysis techniques and mathematical indicators can be used to record a positive result of operations.

It is imperative to limit your risks using the following techniques:

  • Setting a stop loss;
  • Trading with a minimum position.

It is important to use trend strategies due to the high volatility of the pair, that is, always enter long trades on an active price increase.

If the price falls below the support level, then it makes sense to open short positions. On short-term strategies, you can earn an average of 52 points.

GBP/JPY chart

A live chart for the GBPJPY currency pair is an ideal solution for those who do not want to install MT4 for analysis.

Technical analysis

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