GBP/JPY: the macro gap
On the Macro Currency Strength Meter, the British Pound scores -18 and the Japanese Yen scores +25 — a gap of 43 points in favour of the Japanese Yen. The widest divergence is in interest rates, which favours the Japanese Yen. All else equal that gap is a fundamental tailwind for the Japanese Yen against the British Pound — though markets may already have priced much of it in.
Strength gap
-42.6
Stronger side
JPY
Edge is
Widening
Scores
-18 vs +25
Factor by factor
Positive is stronger relative to the other majors, not in absolute terms. The gap column is GBP minus JPY.
| Factor | GBP | JPY | Gap |
|---|---|---|---|
| Interest Rates | -33 | +51 | -84.7 |
| Growth | — | +36 | -35.5 |
| Positioning | -12 | +16 | -28.9 |
| Risk Mood | +6 | -32 | +37.8 |
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