GBPJPY - Will the pound continue to weaken?The GBPJPY currency pair is above the EMA200 and EMA50 in the 4H timeframe and is moving in its medium-term bullish channel. If the correction continues to the support range, we can buy with a suitable risk reward. Breaking the resistance range will pave the way for this currency pair to continue its rise.
Pension Reforms in the UK
• Consolidation of Local Government Pension Schemes:
Rachel Reeves, the UK Treasury Secretary, aims to merge local government pension schemes into larger funds (megafunds). This initiative involves pooling the assets of 86 local government pension schemes into a large fund managed by professional investment managers.
• Objective: To increase investment in long-term, high-risk assets, reduce management costs, and strengthen investment in infrastructure and local areas.
• Further Reforms: In addition, Reeves plans to make changes to financial arbitration services and the combined stock market, marking “the most significant pension reforms in decades.”
Inflation Outlook and Interest Rates in the UK
• Comments from Bank of England Member, Mann:
Bank of England member, Mann, warned that substantial volatility in macroeconomic indicators will be seen in the coming years. He suggests that inflation may remain high for an extended period, necessitating a higher neutral rate. Additionally, he noted that lower interest rates compared to high inflation would put more pressure on investments.
Japan’s Support Package and Economic Stimulus
• Budget and Household Support:
The Japanese government has planned a supplementary budget of 13.5 trillion yen (87 billion USD) to fund an economic stimulus package. This budget includes a payment of 30,000 yen to low-income households and 20,000 yen per child in households with children.
• Energy Subsidies: The government will also reintroduce electricity and gas subsidies from January for three months to help households cope with rising fuel and service costs.
Financial Risks and Supervision by the Bank of Japan
• Concerns About Non-Bank Financial Institutions:
The Bank of Japan’s Deputy Governor, Uchida, warned that increased connections between non-bank financial institutions and banks could pose risks to the entire financial system. He emphasized that non-bank institutions handle almost half of global financial intermediation, which requires close attention.
Actions for Stability in Japan’s Currency Market
• Currency Market Intervention:
Japan’s Finance Minister, Katsunobu Kato, stated that appropriate measures will be taken to control severe and one-sided fluctuations in the currency market if necessary. He stressed the importance of sustainable exchange rate movements in line with fundamental principles.
