Currency investors should consider selling GBP/JPY this week, advises Credit Suisse in its weekly FX pick to clients.
"Rationale: There are several sources of data risk that could provide further negative shocks to investor appetite this week, and GBPJPY should be vulnerable amidst such an environment. Our economists forecast broadly weak data across the world, including a soft ISM manufacturing print and deterioration of Chinese/Eurozone PMIs.
While their forecast for UK manufacturing PMI at 52.9 lies slightly above consensus of 52.3, we see GBP being affected more by gloomy global risk-off sentiment over the course of the week. We still prefer to be short sterling .
Risk: The risk to the trade is if GBPUSD gains limited support purely due to being near historically low ranges, but we see this is a poor reason to be long GBP when in trade-weighted terms sterling is still from being heavily undervalued," CS clarifies.
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