Both the pound and the yen suffered under the burden of the dollar gains. But earlier, the currencies went in different directions. What’s next?

Here is their view, courtesy of eFXnews:

Bank of America Merrill Lynch FX strategy Research argues that short-term risks look balanced for GBP and JPY.

“On GBP, weaker data and headline risks from Brexit negotiations are negative, but the BoE hawkish turn and higher probability for a long transition period since the UK elections are positive.

On JPY, monetary policy divergence is negative, but market volatility is positive,” BofAML adds. 

“However, given our longer term views, we would buy a GBP dip and sell a JPY rally,” BofAML advises. 

In line with this view, BofAML recommends long GBP/JPY and EUR/JPY in the longer term.