FX roundup: Sterling short on Xmas cheer as market eyes BoJ

Sterling was short on Christmas cheer on Monday as it fell on most key crosses -- with the US dollar and Japan's yen performing well -- as the once-great British unit continued its Brexit humbling. All eyes are on Bank of Japan's policy meeting tomorrow.

At about 17:13 GMT, sterling was down 0.65% to $1.2415, and down 0.5% to €1.1887. The dollar-spot index fell 0.16% to $102.810.

"The pound has had a disappointing day, losing ground across the board," said Michael Hewson, chief market analyst at CMC Markets UK.

This was particularly so against the yen, which was regaining some ground ahead of BoJ's interest-rate call tomorrow.

"While some have suggested a further loosening of policy might be possible, it seems unlikely given the sharp decline in the Japanese currency over the last few weeks," Hewson added.

Sterling was down 1.7% to 144.842 yen, but eased considerably less versus the euro and the commodity dollars of Australia, Canada and New Zealand. It was flat on South Africa's rand.

Meantime, the US dollar enjoyed gains on most major crosses, barring Japan's unit, being down 1.05% to 116.70 yen.

"Dollar's resurgence has been the engine behind the phenomenal gains displayed on the USDJPY in Q4," opined FXTM research analyst Lukman Otunuga.

"This pair remains heavily bullish on the daily timeframe with prices expected to clip 120.00 yen in 2017 if the bullish momentum holds," he added.

Some attention might be directed to the BoJ's meeting, but the general expectation was this it would end with policy measures left unchanged.

"The BoJ remains notorious for surprises and any unexpected shockers could create explosive levels of volatility in the USDJPY," Otunuga cautioned.

"Technical traders may continue to observe how the USDJPY reacts to the 118.50 yen resistance."

Overall, Otunuga contended, the bullish impacts of last week's Federal Reserve hawk shocker -- coupled with repeatedly positive US domestic data -- could ensure the dollar charged into 2017 securing gains.

"Sentiment remains firmly bullish towards the Dollar as the year comes to an end with any weakness in prices seen as a technical correction," he said.

Investor focus would be on the US gross domestic product report out Thursday.