GBP/JPY looks as though it is heading back towards 120 – SocGen

UK public sector finances are taking their third big hit in 25 years. Kit Juckes, Chief Global FX Strategist at Société Générale, expect the GBP/JPY pair to slide toward the 120 level.

Pounding on the debt

“Sentiment regarding Sterling is still as dire as ever, and if positions echo that, the Pound will find some support at some stage, but there’s no shortage of bad news out there to keep the pressure on.”

“Today’s bad news for the currency comes from the public sector borrowing data. The latest ONS press release makes dismal reading: PSNB excluding the public sector banks was GBP22 bn in November, almost GBP14 bn than the same month last year, and the biggest November deficit on record. Debt interest payments were also the biggest on record for November.”. 

“GBP/JPY, which was briefly above 170 this Autumn, looks as though it’s heading back towards 120, a level which has had magnetic appeal since the financial crisis.”