On Thursday, the Bank of England meets and is still expected to increase interest rates by 25 basis points to tackle surging UK inflation. However, the recent slowdown in the UK’s housing market has prompted short-term interest rate markets to see a lower terminal rate for the Bank of England than it did one month ago. As a result, the GBP has been losing value over the last few weeks. Will the Bank of England stress growth concerns as reasons to avoid any further rate hikes?

The Bank of Japan also meets this week. Will it formalise a communication to markets with regard to exiting it negative interest rate policy this week? if it did, then it would be reasonable to expect the yen to gain. So, there is a possibility for pound weakness and yen strength ahead.

This ties in remarkably well with a very strong seasonal pattern that exists in the GBPJPY. It has fallen 80% of the time over the last 15 years between September 19 and October 9. It has had an average fall of over 3%. Is this now the time for these falls to begin?

Major Trade Risks: The major trade risks here would be if the BoE signals a steeper rate path than short-term interest rate markets except.

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