Europe Summary and Highlights 22 December

European trading sees the focus remaining on the JPY, after Japanese officials warned over FX intervention in Asia.  The market is wary on BOJ intervention but the bias is that it is unlikely to occur over the Christmas period.  Traders see USDJPY in a range 157.00 to 157.90 and a bias to 157.00, given some pre-Christmas trimming of positions. 

Elsewhere, GBP gained ground versus the USD and EUR in Europe.  The view is that rates could bottom at 3.50% given the BOE guidance that further rate cuts will now be a close call.  However, the economist’s consensus is towards two 25bps cuts, on the view that UK economic weakness will prompt the MPC hawks to give ground and deliver more than discounted in the money market.  Final GDP data had little to provide for GBP direction.