Giles Coghlan LLB, Lth, MA
Financial Source
The JPY weakness has been notable this week. Some are even talking about the carry trade on the JPY coming back. Japan’s PM Kishida is also in favour of a weaker JPY to boost exports. Remember, weak yen = cheaper exports. The Bank of England and the Bank of Japan divergence looks set to continue froth both Governor Bailey and hawkish Saunders expressing inflationary concerns. A rate hike in November or December can’t be ruled out now from the BoE. No interest rate hikes are expected for the next year from the JPY. Therefore, GBPJPY buyers should be favoured by this central bank divergence. Any pullbacks look very attractive, especially when considering the strong seasonal pattern.
Over the last 10 years, the GBPJPY has risen 90% of the time between October 13 and November 30 with an average return of +3.97%. The largest gain was in 2016 with a 12.65% rise. The largest loss was in 2018 where it registered a -1.53% loss.
Major trade risks
Any slow down in the UK economic recovery/ bad Covid news for the UK will invalidate this outlook.
Any negative developments around the N.Ireland protocol will invalidate this outlook.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.