GBP/JPY could move above the 170.00 level in the short-term – Rabobank

Both the Japanese yen and the British pound have been under a lot of pressure recently. GBP/JPY remains firm around 168.50 and economists at Rabobank believe that the pair could rise above the 170 mark.

A key week for GBP and JPY

“Although UK fundamentals remain sour, it is possible that the risk of further panic selling of the pound may now be contained. That said, the week ahead will be another crucial one in terms of the outlook for GBP.”

“The outlook for the JPY is essentially a mix of two drivers. On one hand the BoJ’s accommodative monetary policy settings are undermining the JPY in an environment in which most other central banks are hiking interest rates. On the other hand, FX intervention from the MoF is designed to make speculators think twice about shorting the JPY.”

“We see risk of GBP/JPY moving above the 170.00 level in the short-term, though we expect that these levels could be difficult to sustain, and forecast that GBP/JPY is likely to be lower on a three-month view on the back of a weak pound.”