- The pound’s rally is capped again just below 155.00.
- The Bank of England’s rate hike expectations are driving the rally in the British pound.
- GBP / JPY is expected to hit the 159.80 zone – Credit Suisse.
The GBP appreciated for the fifth day in a row against a weaker Japanese yen on Wednesday, although the cross GBP/JPY it has failed to break the resistance area at 154.80 / 90.
The pound continues to be offered by the expectations of rise of the BoE
The British pound remains strong across the board, which has been reflected in the 3.2% rally in GBP / JPY seen over the past two weeks. Investors anticipate that the Bank of England will be the first major central bank to start raising interest rates following the COVID-19 crisis. Rising energy prices have driven annual inflation well beyond the Bank of England’s 2% target for price stability, prompting some Bank of England officials to openly suggest the possibility of speeding up prices. rate hikes, thus increasing the attractiveness of the British pound for investors.
On the other hand, the Japanese yen, particularly sensitive to monetary policy spreads, is suffering against the British pound and the US dollar. With the Bank of Japan ruling out the possibility of any rate hike in the foreseeable future, and with the yield curve under control, the JPY remains vulnerable to monetary tightening expectations in the rest of the world’s major economies.
GBP / JPY is expected to continue rallying towards – 159.80
On the bigger picture, Credit Suisse’s currency analysis team expects the pound to continue to appreciate in the coming weeks, heading towards levels near 160.00: “With a significant base already established in February 2021, we are looking for a break above 156.62 for more reinforces the positive outlook, with resistance expected below at 159.80 “.
Technical levels
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