Pound sterling

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Pound sterlingPound Sterling / Yen - GBP/JPY

From 2000 to 2007, the GBP/JPY cross fluctuations (Pound sterling/Japanese Yen) had a lot of similarities with the GBP/EUR ones, except about the specific strong volatility (important monthly variations of the exchange values) of the GBP/JPY cross (maybe because of the numerous direct interventions of the Bank of Japan on the Forex).

During this period, the Pound sterling appreciated against the Yen, with as a background a monetary policy with superior interest rates in Great Britain than in Japan, in particular in 2006-2007 when the British economy was strongly growing.

So investors put in place « carry trade » operations which consist in placing oneself « long » on the Pound by buying this currency at the more favorable interest rates with yen invested ‘short”, that is to say sold.

This strategy upended from 2007 in the context of the apparition of the subprime crisis.

The Bank of Englands rates fast decreased (with a quickening of the increase in 2008) and similarities of fluctuations were observed between the GBP/JPY and GBP/USD.

In September 2000 we had the exchange value GBP/JPY = 150, the BBP/JPY cross appreciated for 4 years (despite the strong monthly even weekly volatility) until the value GBP/JPY = 206,88 in March 2004; then these fluctuations remained quite stable until September 2005 (GBP/JPY = 199,30) before the appreciation of the Pound sterling against the Yen became more important and lasted until a higher GBP/JPY = 248 in July 2007.

Concomitant to the reversals observed against the dollar and the euro, a bearish trend began for the Pound, a trend that made the cross reach GBP/JPY = 200 in March 2008 before a collapse was observed after what seemed to be a recovery.

The decrease lasted until February 2009 at GBP/JPY = 132 (-46% in a year and a half).

The Pound sterling won ground on the Yen (GBP/JPY = 160 during the Summer of 2009), but an adjustment happened not only with the Yen but also against the dollar and the Euro (GBP/JPY = 149,34 at the beginning of December 2009).

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