Credit Agricole: buy GBP/JPY on dips
Strategists at Credit Agricole see the past few weeks’ GBP downside as corrective and recommend buying GBP on dips, especially in the GBP/JPY cross.
According to strategists, the recent GBP decline was driven by falling investors’ rate hike expectations. However, the latest MPC minutes showed that 2 of 9 policymakers voted in favour of an immediate rate hike. These 2 MPC members regard the fall in the unemployment rate as a more important indicator of the degree of slack as compared to wage growth. Given all that, scope for further depreciation of the pound is limited.
Chart. Daily GBP/JPY