Fantasy Currency Trader (Pound to Yen Exchange Rate) ? Forecast For GBP/JPY Remains Positive

November 12, 2014 - Written by John Cameron

STORY LINK Fantasy Currency Trader (Pound to Yen Exchange Rate) ? Forecast For GBP/JPY Remains Positive

On 22nd September, our Fantasy Currency Trader made the future currency forecast that the Pound to Yen exchange rate (GBP/JPY) would climb from the level of 178.260 which it was then trading at. So how is the prediction playing out?

GBP JPY Threatens 6-Year High

In a significant move since we last visited the GBP JPY exchange rate, the Pound Sterling has surged to within one solitary Yen of its highest level since the Autumn of 2008 against the Japanese unit.

It is worth re-calling that the last time the GBP JPY exchange rate traded above the 185.000 threshold came at the height of the global financial crisis following the demise of leading US investment bank Lehman Brothers.

Yesterday brought the highest trading rate for the pair since this time, (if you take out 6th November of this year), as market participants continued to price-in the Bank of Japan’s apparent determination to weaken its currency and boost Japan’s terms of trade.

The latest JPY rates today:

The Pound to Japanese Yen conversion rate is -0.68 pct lower at 183.06884 GBP/JPY.
The Euro to Japanese Yen exchange rate is -0.5 pct lower with a conversion rate of 1 EUR equals 143.67297 JPY.
The US Dollar to Japanese Yen exchange rate converts -0.39 per cent lower at 1 USD is 115.28700 JPY.
The Swiss Franc to Japanese Yen exchange rate is -0.46 pct lower with a conversion rate of 1 CHF equals 119.44611 JPY.
The Canadian Dollar to Japanese Yen exchange rate converts -0.27 per cent lower at 1 CAD is 101.82565 JPY.
The Hong Kong Dollar to Japanese Yen exchange rate is -0.39 pct lower with a conversion rate of 1 HKD equals 14.86797 JPY.

Snap Election For Japan?

The latest bout of selling pressure on the Japanese tender was driven by market whispers suggesting that Japan’s Prime Minister Shinzo Abe is set to call a snap election, perhaps as soon as next month. The uncertainty which these whispers have engendered were augmented by rumours that Japan’s policymakers are considering postponing a planned sales tax increase which had been penned in for the coming months.

US Dollar Japanese Yen Exchange Rate GBP JPY Spirals

The Yen slumped to its lowest level in seven years against the US Dollar (currency:USD) yesterday, highlighting the headwinds which the Japanese unit continues to face. The move higher for USD JPY was partly fuelled by an ongoing positive performance from the Buck, but Eric Viloria of Wells Fargo & Co. Asserted that the move was also driven by a cocktail of negative factors holding back the Yen; he told journalists yesterday that, ‘it all ties together how the tax hike is going to impact the economy, and that’ll influence how the Bank of Japan’s going to achieve the 2 percent inflation target.’ In effect, lower sales taxes equate to an even looser monetary policy from the BoJ.

Pound to Yen Exchange Rate Gains Forecast

For this reason, our recommendation is to HOLD the Pound Yen exchange rate GBP JPY from its current level of 183.721 GBP JPY (present valuation of original GBP10,000 is GBP10,306.35, making a handy pre-cost profit of GBP306.35). An ultimate target for the trade remains at August 2007’s multi-decade peak of 251.090.

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TAGS: Currency Predictions Fantasy Currency Trader Forecasts Jap Forecasts