The GBP/JPY remains one of the most stable currency pairs. The uptrend is steadily continuing for the 15th month in a row and it seems unstoppable. The pound was more expensive than now only five years ago - before May 2016. All frightening predictions about the disastrous impact of Brexit on the British economy have not been justified so far. Over the past 12 months the pound has gained 15.8% against the yen. Relative to the stronger than the yen USD, the growth for the year was more than 20%. Thus, the pound can be considered the strongest currency at the moment.
This week, the pound strengthened due to perspectives of tightening the monetary policy by the Bank of England, whose representatives announced plans to raise the cost of borrowing. The optimism is reinforced by reports of no new deaths from the coronavirus for the last 24 hours, the vaccination rate is excellent, and the government is easing quarantine restrictions. The macroeconomic statistics are also in line with this optimism: the housing price index is higher than expected, and business activity reached new maximums in May.
This is happening against the background of a weakening yen, which is quite obvious given the global economic recovery and weak demand for safe assets. At the same time, Japan's economy is recovering at a weaker pace: inflation is still at a very low level. The government extended the state of emergency due to the pandemic until June 20, which negatively affects economic activity and has already reflected on the growth of industrial production and the jobless rate. All of these indicators remain below expectations, and unemployment in April rose by 0.2% to 2.8%.
The last price correction was recorded in April. The downward movement was very limited, and the rates quickly recovered. Now, on the threshold of testing 5-year highs, we cannot see any other option but the continuation of the uptrend, with the achievement of new highs. Most technical analysis tools also indicate the effectiveness of the deals on the trend.
