Wednesday saw the Pound to Japanese Yen exchange rate open in the region of ¥148.6796 and close slightly lower around ¥148.0197.
This deprecation was caused by a mixed reception to the UK’s GDP growth rate data – on the plus side, 0.7% growth was reported for the 3-month average to the end of August.
Less supportively, however, a flat 0% reading was seen for August on its own; this lacklustre result came alongside PricewaterhouseCooper Chief Economist John Hawksworth’s forecast that:
‘The underlying trend is for moderate UK growth at a rate of around 1.5% per annum.
‘This is somewhat below its longer term trend rate of around 2% and reflects the continued drag on business investment in particular from Brexit-related uncertainty.’
Another factor lowering Pound Sterling demand yesterday was the UK’s trade balance for August – this showed a larger-than-expected deficit expansion.
Over in Japan, the day’s economic news included reports of slowing machine tool orders in August as well as September.
Pound Sterling to Japanese Yen (GBP/JPY) Exchange Rate Ticks Higher despite DUP’s Brexit Rebellion
The Pound (GBP) has risen by 0.3% against the Japanese Yen (JPY) today, despite the handicap of an alarming Brexit development.
Democratic Unionist Party (DUP) leader Arlene Foster has taken issue with the EU’s proposed solution to the Irish border issue, which is to have Northern Ireland remain in the EU customs union while the rest of the UK leaves.
Although seemingly an advantageous deal on paper, this is untenable to the DUP who are worried about the EU exerting control over Northern Ireland because of its separate status from the UK.
The DUP’s objection to the EU’s offer isn’t new, but the party has most recently escalated its opposition by threatening to reject the UK government’s budget if it doesn’t get its way.
The situation remains tense on both sides of the Irish Sea, although as today’s GBP/JPY exchange rate rise shows, the Yen is still the weaker currency despite the negative impact of the DUP’s objection.
Japanese Yen to Pound Sterling (JPY/GBP) Exchange Rate Drops -0.4% after IMF’s ‘Abenomics’ Warning
The Japanese Yen (JPY) has made a moderate loss against the Pound (GBP) today by falling by -0.4% in the JPY/GBP pairing – this decline follows comments from the International Monetary Fund (IMF) about Japan’s ‘Abenomics’ economic strategy.
Named after current Prime Minister Shinzo Abe, the economic strategy has come under scrutiny from IMF analysts who say:
‘The strategy of Abenomics remains appropriate, but reinvigorated and credible policies are needed.’
IMF experts don’t believe that the Japanese economy is on track for disaster, but the suggestion that reforms need to be made has still rattled JPY traders.
Pound Sterling to Japanese Yen Exchange Rate Forecast: Will GBP/JPY Dip on Falling UK Wage Growth?
The next major UK and Japanese economic data isn’t out until the coming week, so the Pound (GBP) might see little movement against the Japanese Yen (JPY) on Friday.
Looking to the week ahead, the first notable data will be Monday’s Japanese industrial production figures for August.
The finalised readings are tipped to confirm increased activity during the month in August with a shift from -0.2% to 0.7%; a converse annual decline from 2.2% to 0.6% is expected.
Annual data is typically considered more important than monthly ecostats, so the Yen might dip against the Pound on such news.
Despite the potential for early GBP/JPY exchange rate gains next week, Pound Sterling could drop back against the Japanese Yen on Tuesday if the UK’s jobs market data disappoints.
Current expectations are for a slower pace of UK wage growth to be reported, alongside a rise in the number of persons claiming jobless benefits.
Both results in tandem could weaken the Pound, given that falling wage growth could reduce the chances of a 2019 Bank of England (BoE) interest rate hike.
If the pace of wage growth slows below the rate of inflation, UK households can face wage squeeze conditions and see a reduction in their real incomes.
As well as making a BoE rate hike less likely, this can also mean that UK retail sales decline and there may be an eventual dip in GDP growth.
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TAGS: Pound Yen Forecasts