Yesterday the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate was trending in the region of 171.4300, ebbing between a low of 171.1500 and a high of 171.4900. It experienced movement of around 0.15% due for the most part to growing demand for the safe-haven Yen amidst the rising tension between Russia and Ukraine.
Following the unsatisfactory growth in the UK’s manufacturing sector (as was detailed by the recent PMI report) and the Bank of England’s (BoE) decision to keep their low interest rate of 0.50%, The Pound has been trending on the back food.
Sterling saw little improvement yesterday given the lack of UK data released.
Conversely the Japanese Yen (JPY) gained strength as traders flocked towards the safe-haven currency. The Yen’s growth was compounded by several data release which hit, or were close to hitting, forecast figures.
Today one data release in particular will be important to gauge Japan’s economic performance; year-on-year Industrial Production. This figure is considered a reliable leading indicator and one which conveys information about the overall health of the Japanese economy.
Once again, today has little significant UK data publications so movement in this pairing is likely to be a result of Japanese data – although the British Retail Consortium’s like-for-like sales figures will be of interest.
Forecast for the Days Ahead
Tomorrow is particularly significant for the Japanese Yen. Japan’s Gross Domestic Product (GDP) Report is highly important as GDP serves as one of the primary measures of overall economic well-being. It is forecast to drop from the previously posted figure of 1.6% to -1.8%.
Tomorrow is also particularly important in terms of UK data. Average Weekly Earnings, Claimant Count Rate, Employment Change, ILO Unemployment Rate and Jobless Claims Change will all have significant bearing on the potency of the Pound. Most important in terms of tomorrow’s UK data is the Bank of England’s Inflation Report. Their assessment of the UK’s medium-term inflation prospects and risks will be hugely influential in the coming days for all pairings with GBP.
Thursday has very little UK data to be released other than the RICS House Price Balance, which is unlikely to cause much movement unless it delivers a particularly shocking result.
Thursday is only slightly more significant for the Yen as Japan’s Buying Foreign Bonds and Buying Foreign Stocks reports could cause Yen fluctuations. Also the year-on-year Machine Orders report is one to watch because it is considered the best leading indicator of business capital spending, and increases are indicative of stronger business confidence and a better forward outlook. It is forecast to rise dramatically from the previous figure of -14.3% to 3.0%.
Friday will be extremely prominent for the Pound as the year-on-year GDP report is due. It is currently forecast to maintain its previous figure of 3.1%.
In short, the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate could climb if this week’s UK employment figures impress.
GBP to JPY Gains a Little Strength Ahead of the Japanese GDP Statistics
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is currently trending around 171.6900.
The slight increase since yesterday can be attributed to a fractional fall in Japanese industrial production from 3.2% to 3.1%.
The safe haven Yen will also continue to trend higher as geopolitical unrest continues.
Look for tomorrow to shake up the GBP to JPY exchange rate. Japanese Gross Domestic Product data will have a marked influence, as well as the Bank of England Inflation Report. Also the correlation between UK average weekly earnings and the unemployment rate will be of interest economically.
The Pound to Yen (GBP/JPY) exchange rate has moved between a low of 171.3000 and a high of 171.7500.
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