The GBP/JPY surged higher during the previous week, driven by the rise in risk appetite, and the British pound may continue to appreciate against the Japanese yen throughout August 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 GBP/JPY surged higher during the previous week, driven by the rise in risk appetite, and the British pound may continue to appreciate against the Japanese yen throughout August 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 slipped to a low of 118.83 in January as investors scaled back their appetite for risk however, the rebound in market sentiment paired with long-term expectations for higher interest rates may continue to support the rally throughout the second-half of the year. Credit Suisse overnight index swaps show investors forecast the U.K. central bank to raise the benchmark interest rate by nearly 125bp over the following year but at the same time, the downturn in the labor market paired with fears of a slower recovery may lead the BoE to take additional steps to stimulate the ailing economy. Over the next few hours of trading, risk trends are likely to drive price action for the GBP/JPY as the global economic calendar remains fairly light however, as jobless claims in the U.K. are expected to rise 28.0K in June, deteriorating fundamentals could hamper the prospects for an economic recovery later this year. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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