As traders opt to invest in high-yielding currencies after a massive US Dollar depreciation, the Japanese Yen has generally declined against the majority of its competitors. Meanwhile, Sterling has softened as traders await the Bank of England rate decision due to be announced at midday on Thursday.
The Pound Sterling to Japanese Yen exchange rate is currently trending in the region of 174.7500.
As geopolitical concerns mounted over the past week, the safe-haven qualities of the Japanese Yen saw the Eastern currency flourish. Risk sentiment continued to wane on Wednesday after Chinese data softened.
Sterling has generally depreciated against the majority of its traded peers after several UK officials voiced concerns over UK inflation.
Bank of England Deputy Governor Ben Broadbent initiated anxieties when he stated that a rate increase couldn’t occur until inflationary issues were resolved. Kristin Forbes, the newest BoE policymaker, emulated those views in her maiden speech as she stated that inflation had stymied economic growth.
Business Secretary Vince Cable added to the Sterling downtrend after suggesting that inflationary issues were as a result of an overvalued Pound.
The Pound Sterling to Japanese Yen exchange rate has hit a low today of 173.9400.
Thursday’s British data has been negative thus far, although traders are holding off ahead of the Bank of England rate decision and Friday’s UK Trade Balance data.
House Price Balance was forecast to decline from 39.0% to 36.0%, but the actual result tumbled to 30%.
Japanese data on Thursday has been mixed but erring on the side of positivity. Not positive enough, however, to counter the impact of improving trader risk sentiment.
Buying Foreign Bonds declined from the previous figure but Buying Foreign Stocks appreciated from the previous score.
Perhaps most critically, yearly Machine Orders came in above the median market forecast of a decline from 1.1% to -4.9%, with the actual data coming in at -3.3%.
As mentioned above, the reason for the Yen struggling to make any advance is as a result of improved risk sentiment following a softening US Dollar. The Federal Reserve minutes from their latest policy meeting indicated that policymakers were concerned over slow global economic growth and an overvalued US Dollar.
Forecast for the Pound to Japanese Yen Exchange Rate
Friday’s British trade balance data is likely to provoke volatility for the Pound. A few Bank of England officials will be making speeches which could also potentially spark Sterling movement.
Those invested in the Japanese Yen will be watching Friday’s Japanese data closely. Bank Lending including Trusts, Bank of Japan policy meeting minutes, Tertiary Index and the Consumer Confidence Index all have the potential to influence Yen movement.
The Pound Sterling to Japanese Yen exchange rate has reached a high today of 175.0000.
UPDATE
The pound Sterling to Japanese Yen exchange rate is currently trending in the region of 173.6898.
An International Monetary Fund report on Friday has all but quashed traders risk appetite, giving a healthy boost to safe-haven currencies such as the Japanese Yen.
The report suggested that the sustained period of very low interest rates poses the threat of a fresh financial crisis by encouraging excessive risk taking on global markets.
José Viñals, the IMF’s financial counsellor, said: ‘And risks are shifting to the shadow banking system in the form of rising market and liquidity risks, if left unaddressed, these risks could compromise global financial stability.’
The Japanese Yen has appreciated on Friday in spite of some disappointing data publications. Consumer Confidence has fallen from 41.2 to 39.9 despite predictions of a rise to 41.8. Additionally the Tertiary Industry Index contracted by -0.1% in August.
