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GBP/JPY Nears Highest Level Since 2016

  • After a particularly muted morning, currency markets picked up as outgoing BoE MPC member Vlieghe spoke on the future of the bank rate as the UK economy rolls off the pandemic-era furlough scheme.
  • Vlieghe stated that an earlier-than-expected rate hike is possible should the transition from furlough to a post-pandemic labour market take place smoothly. In response, the Gilt curve steepened as the 10y yield rose, helping boost GBP across the board. GBP/JPY responded by narrowing the gap with 2018's 156.61. A break above here would mark the highest rate since 2016.
  • Early month-end flow worked against the JPY Thursday, which fell against all others in G10. USD/JPY eyes 110.15 Fib resistance ahead of any test on the year's best level at 110.97.
  • Focus Friday turns to Japanese jobless rate data, French prelim inflation, US trade balance, PCE data for April and the MNI Chicago PMI. G7 finance ministers also meet to discuss China's place in global trade, while ECB's Villeroy is due to speak.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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