Listen to the latest market mood for the GBPJPY pair.

Weak GBP, Strong JPY

The GBP has reasons for weakness in the near term. Firstly, policymaker Silvana Tenreyro was positive about negative interest rates and suggested that discussions on such a move were ‘encouraging’. Secondly, the risks of unemployment rising sharply in the UK over the next couple of months are high as the furlough scheme is ending and the job retention scheme is limited in its scope. Thirdly, Brexit negotiations are ongoing and there is still likely to be ups and downs in the GBP as these negotiations remain.

The JPY will find buyers on any return to risk-off trading and expectations of structural reform with President Suga now in place. Therefore, expect GBPJPY sellers from rallies higher.

Trade Risks:

  • A positive Brexit deal will invalidate this outlook.
  • A return to risk-on sentiment will invalidate this outlook.