Despite overcoming the crisis and the recovery of the pound after an unprecedented fall, there are rather pessimistic forecasts for the British economy, according to which it will be the weakest economy in Western Europe. High inflation, industrial contraction and recession are expected, which has already begun and has been officially confirmed by the Bank of England. How to invest in the pound in such conditions? - It's very simple, because in the confrontation with the yen, the pound retains good chances and we can see on the chart that the uptrend continues, and the rates are in the growth stage of the eighth trading day.
This week, the yen came under pressure after it became known that it had reached the highest inflation rate in Japan in the last 40 years. At the same time, business activity is declining, and the index of business activity in the manufacturing sector has fallen below 50 points. Against the background of ultra-soft monetary policy, high inflation may become a problem for the Japanese economy, while the Bank of Japan does not take decisive steps to strengthen the yen, with the exception of single currency interventions. As a result, despite the fact that safe assets are now in demand, the yen still remains vulnerable even against a weak pound.
The pound received support this week, as business activity indices turned out to be higher than forecasts. The index of industrial orders was -5 points, which is also better than expected. This gives investors hope that perhaps the recession will not be as large as expected, and GDP will eventually be better in the 4th quarter.
Next week, volatility will decrease for GBP/JPY. The only thing that will interest investors is unemployment in Japan, and here the JPY may get a chance because, according to forecasts, unemployment fell by 0.1% in October. Nevertheless, technical analysis tools show us a strong Buy signal. We believe that the lows reached at the beginning of the month will be tested again in December, and may be updated. Therefore, your choice today are the deals to BUY.
