The Pound to Japanese Yen (GBP/JPY) exchange rate has been trending lower after the Bank of England (BoE) announced it would maintain its current 0.50% interest rate benchmark for the foreseeable future. The release of the Monetary Policy Committee (MPC) meeting minutes later in November will reveal how policymakers voted after a 2:7 split in the last three meetings.
In addition, Bank of England Governor, Mark Carney, is scheduled to speak in Paris on Friday – an event likely to cause additional Pound Sterling exchange rate movement. A hawkish central banker could see the British currency recoup some losses, whereas a dovish tone is likely to pressure the Pound lower against other majors.
Pound Exchange Rate Softens against the Majority of Currency Peers
The Pound has suffered against a wealth of currency majors on Thursday, including the Euro (GBP/EUR). The GBP/EUR exchange rate could see massive movement today as both the BoE and European Central Bank (ECB) have made interest rate announcements.
Like the BoE, the European Central Bank also advocated to keep interest rates the same. Many investors are looking ahead to when central bank President, Mario Draghi holds his press conference later today.
The press conference is likely to see Draghi under fire as economists and investors voice their fears of deflation in the Eurozone as well as the possibility of a triple-dip recession.
Japanese Deflation Spiral Fears Cause Fast Acting BOJ
Meanwhile, Japan released its Coincident Index and Leading Index on Thursday, which offered some support for the safe-haven asset. The Coincident Index, used to measure current economic and business conditions, rose to 109.7 in September from 108.3, just short of the 109.8 forecast. The Coincident Index depends on the performance of sectors like industrial production, retail sales and new job offers.
Recently, the government downgraded its view on the index, suggesting the economy could be entering a period of contraction. A Cabinet official stated: ‘If the Coincident Index rises sharply next month, it is theoretically possible that the basic assessment of it will be upgraded.’
In comparison, the Leading Index rose to 105.6 in September from 104.4, bypassing predictions of 105.5—the highest reading since April.
Pound to Japanese Yen (GBP/JPY) and Pound to Euro (GBP/EUR) Exchange Rate Forecast
Other events that may alter the GBP/JPY exchange rate on Thursday will be the release of UK Gross Domestic Product (GDP) figures, along with Japan’s Buying Foreign Bonds and Stocks stats. UK Trade balance data could see the Pound soften further against the Japanese Yen if the deficit widens in September, as it’s currently forecast to do.
Japanese Yen has Potential to Rally versus Pound (JPY/GBP)
The Japanese Yen has extended its gains versus the Pound on Friday ahead of UK Trade Balance figures. However, if the UK trade balance deficit widens as economists’ expect, the Yen could continue to rally versus the Pound.
Trade Balance Continues to Widen Causing Pound Sterling Losses
The Japanese safe-haven asset continued to be bullish against the Pound as the UK trade deficit widened more than economists’ had forecast. The Visible Trade Balance contracted further from -£8950 to -£9821 in September.
Economist Alan Clarke stated:’There has been no change in the trend — net trade has contributed very little to growth of late and there is little sign of that changing any time soon.’
With no further UK data released on Friday, the Pound could fluctuate on any developments from BoE Governor Mark Carney who is speaking with various other bankers in Paris today.
Japanese Yen (JPY) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Japanese Yen, 182.0500,
US Dollar,,Japanese Yen ,115.3100,
Euro,,Japanese Yen ,142.5700 ,
Australian Dollar,,Japanese Yen ,98.8900 ,
New Zealand Dollar,,Japanese Yen,88.5500,
[/table]
