Japanese retail investors have formed a large long position in the pound. Speculation on negative rates could undermine the British currency.
Currency strategists at the Bank of Tokyo-Mitsubishi UFJ forecast a stronger yen against the pound, as talk of negative rates in the UK encourages traders to sell British currency.
Retail investors from Japan could trigger sales because they have accumulated a significant amount of long positions in the pound, said Derek Halpeni, head of market research at MUFG.
Reduced profitability in foreign markets is a key factor in supporting the yen, pricing will more confidently begin to lay rates in the UK in the foreseeable future below zero, this will strengthen the tendency to buy yen.
Bank experts recommended selling the pound against the yen at 131.25 with a target of 126.60 and a stop order to buy at 134.10.
The yen has weakened in recent weeks, but MUFG experts are still confident in the potential of its strengthening.