The Japanese yen is one of the few currencies against which the pound is still in a dominant position, although over the past 3 months everything has been going against the GBP. This is the scenario where high inflation is beneficial since it permits the Bank of England to continue raising interest rates. At the same time, the consumer confidence index is at a record low. The one saving grace has been low unemployment: it appears that finding a job in the UK is simple. The question, of course, is that wages do not keep up with inflation and more and more people may face poverty and lack of money for living.
The scenario is similar in Japan, although there was a problem with low inflation of less than 2% and limited consumer activity among the populace. It seems that there will be one less problem, because the rise in food prices has not bypassed Japan: food prices have risen at the highest rate for the whole 7 years. So the Bank of Japan could join the club of raising the rates and increase it at least once . In April, Japan's trade deficit climbed by two-fold over March, reaching 839.16 billion yen. Of course, even without achievements in the economy, the JPY can count on support as a safe asset, but so far investors prefer a more profitable dollar and still not ready for a desperate run to a “safe haven", waiting for a better moment.
Next week will be much less volatile: all macroeconomic reports for April have been received. In addition, next week there will be 2 holidays in the USA, UK, China. Today, we believe that the pound will retain the potential for growth against the JPY and open new deals to Buy. Most technical analysis tools also indicate the effectiveness of Buying in the medium term.
