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JPY Weakening Trend Continues, EURGBP Falls To Fresh 2021 Lows

FOREX
  • GBP was the best performing G10 currency on Friday. The moves are largely underpinned by a continued reassessment of the monetary policy outlook, with markets responding to the rise in front-end UK yields across the week, as a number of BoE speakers flagged the increased likelihood of a rate hike in the coming months.
  • While the moves in GBP have lagged the move in yields, significant breaks in sterling crosses have bolstered the GBP outlook. EUR/GBP triggered the mid-August low at 0.8450 and then breaching 0.8430 (Low Feb 27, 2020). Similarly, GBPJPY (+1.18%) has broken convincingly above the 156.00 handle as well as the early 2018 highs of 156.61.
  • The Japanese Yen was once again the worst performer, with USDJPY soaring through the 114 handle and gaining over 200 pips on the week. The pair has fallen just shy of the 2018 highs that come in at 1.1454. Coincidentally, these levels match closely with MNI tech resistance at 114.50 2.0% 10-dma envelope and a 1.382 Fibonacci projection.
  • JPY weakness was broad based and pressured by the strength in global equity indices to finish the week. Notable crosses such as NZDJPY (+1.04%) was also a beneficiary of the stronger risk sentiment.
  • Dollar indices remained unchanged for the session, holding onto marginal losses for the week.
  • New Zealand CPI will kick off next week's docket shortly after the open, as well as multiple Chinese data points including GDP, Retail Sales and Industrial production. UK and Canadian CPI are data highlights for the week.
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