Weak GBP, Strong JPY

The JPY will find buyers if the second wave of COVID-19 keeps growing in pace. Global cases now top 17 million after five of the last seven days saw one-day jumps of greater than 250,000 infections.

For the GBP there has still been very little progress made in Brexit talks as both the EU and the UK steel their positions ahead of final negotiations in the Autumn. The official deadline for a deal to be arranged is by year-end, but the end of October is the functional deadline to allow enough time for any deal to be implemented. This means that negotiations should start again in September. With expectations poor about a resolution rallies higher in the GBP should find sellers.

With time running out to arrange a deal the GBPJPY should find sellers if it manages to make its way up to 138.00 and the descending weekly trend line.

We expect this trade to play out between now and the next 4-6 weeks.


Trade Risks:

  • If we see a slowdown in infection rates across the world and a second wave is averted this will invalidate this outlook.

  • If we get positive Brexit news this will invalidate this outlook.



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