FxWirePro: Sterling remains a sell against yen

The UK economy has been performing very well, compared to the doom expected after the referendum vote, beating the forecasts, yet the pound is not a buy against all currencies, even in the short run. We have forecasted a buy call in the pound against the dollar but against the yen, the sterling remains a sell. Despite the unperceived strength in the UK economy, the future outlook remains uncertain and the traders have scaled back their long bets in the pound, after Bank of England (BoE) governor, Mark Carney shared his openness to further rate cuts.

We expect the dollar to weaken against most of its major counterparts, at least in the short to medium term but that would benefit the pound as well as the yen. On the other hand, the Yen is likely to remain well bid amid the uncertainties.

The pound is likely to remain a sell against the yen unless the pair (GBP/JPY) clears 139-140 resistance area.