The British pound continued to appreciate against the Japanese yen, driven by the rise in risk appetite, and the GBP/JPY may trend higher over the near-term as market participants anticipate the Bank of England to tighten monetary policy over the next 12 months.
[B]Currency Pair:[/B] GBP/JPY
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
The British pound continued to appreciate against the Japanese yen, driven by the rise in risk appetite, and the GBP/JPY may trend higher over the near-term as market participants anticipate the Bank of England to tighten monetary policy over the next 12 months. After reaching a high of 197.48 in September, the pound-yen tumbled to a low of 118.83 in January as market participants scaled back on high risk/reward investments however, the rebound in risk appetite paired with expectations for a global recovery later this year may continue to support the rally throughout the second-half of the year as market sentiment improves. At the same time, Credit Suisse overnight index swaps show investors speculate the BoE to raise the benchmark interest rate by 100bp in the coming year, and expectations for higher borrowing costs may drive the British pound higher against its currency counterparts as the central bank maintains a floor on the key rate. Over the next few hours of trading, we may see the GBP/JPY continue to push higher following the rise in global equities and may work its way towards 158.00-10 (50.0% Fib) over the week the next 24 hours of trading as equity futures foreshadow a higher open for the U.S. market. However, as the RSI approaches overbought territory, gains are likely to be capped, and we may see the pound-yen fall back to fill-in the gap from the 120-SMA at 155.24. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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