Japanese Yen

The Pound rose against all major currencies this week as it drew a line under prior losses but BofA Global Research says it can still rise further against the Dollar, Euro, Japanese Yen and Swiss Franc up ahead.

The Japanese Yen stabilised against the Pound, Dollar, Euro and others in opening the new month but remained near landmark lows and would likely have most to gain from the single currency and Sterling if a recently popular 'carry trade' leads to another lurch lower currency and intervention to support it  from Tokyo  

The Japanese Yen is close to the biggest fallers on the market for a second year running and while forecasters say an eventual shift in Bank of Japan (BpJ) interest rate policy should ultimately lead to a recovery, the Bank of England's (BoE) ongoing experience with inflation suggests that the opposite could easily become true. 

The Pound to Yen exchange rate climbed to its highest level since before the Brexit referendum in the opening week of June but new data revealing a strengthening Japanese economic recovery could pose a significant risk to Sterling if it leads the Bank of Japan (BoJ) to favour a hawkish shift in its monetary policy next week.

The South African Rand and Japanese Yen are among the market's biggest fallers so far in 2023 but both might benefit if a successful passage of legislation to raise the U.S. government debt ceiling leads to stability in the world's largest government bond market and a softening of the Dollar.