Selling USD/JPY rallies as BoJ unconventional policies are not sustainable – BofA

Economists at Bank of America Global Research look to sell USD/JPY on rallies. At the same time, they expect more upside potential for the British Pound in the near term.

Improving chances for a compromise with the EU on outstanding Brexit issues

“We would sell USD/JPY rallies, as we believe the BoJ unconventional policies are not sustainable, and our inflation forecast in Japan for 2023 is well above the market consensus – 3% vs. 1.9%.” 

“We see more upside potential for GBP in the short term, on improving chances for a compromise with the EU on the outstanding Brexit issues, particularly those related to the Northern Ireland protocol. However, we remain concerned about the GBP outlook beyond such a deal, as the UK is already in the stagflation scenario that we see as a risk for the rest of the world later this year.”