The Japanese Yen (JPY) to Pound Sterling (GBP) exchange rate advanced and edged away from a six-year low against US Dollar (USD) on Tuesday after the Bank of Japan held off introducing fresh monetary stimulus measures despite falling sentiment towards the economy.
The Central Bank announced that it would maintain its pledge to increase its monetary base at a yearly rate of ¥60 trillion to ¥70 trillion.
The announcement was widely forecast by economists.
The central bank projects prices to rise in the midterm and some BOJ board members believe it would not be appropriate to trigger a more rapid weakening of the currency with more stimuli now, according to people familiar with the matter.
The next alteration in the BoJ’s stimulus programme is expected to take place in January 2015.
Following the announcement the Yen advanced against the Euro, which slid to a session low of ¥137.17
The Euro was weakened by the release of more disappointing data out of Germany. Industrial output in the 18-member currency bloc’s largest economy tumbled more than forecast in August to its worst level since 2009.
The head of the BoJ Haruhiko Kuroda believes that a weaker Japanese Yen will prove to be a positive for the Japanese economy despite concerns over the rising cost of imports because of its weakened status.
‘The impact can be different on the industry and size of the company but, in general, I think a falling Yen that reflects economic and financial fundamentals is positive for the economy as a whole,’ Kuroda said in an address to the Japanese Parliament.
A weaker yen helps make Japanese exporters such as Toyota and Sony more competitive overseas and tends to lift their profits, but it also makes overseas imports pricier for many domestic firms and consumers.
‘There is no need for the BOJ to act now as the Yen will create inflationary pressures. The weak Yen provides relief for the Bank of Japan,’ said Yuichi Kodam, chief economist at Meiji Yasuda Life Insurance Co.
Pound Sterling to Japanese Yen (GBP/JPY) Exchange Rate Forecast
The Pound could regain ground later in the session if the latest Manufacturing and Industrial Production data comes in positively.
Economists are expecting the report to show that industrial production increased by 2.6% on an annual basis and by 0.2% month on month.
Manufacturing is expected to increase by 0.1% month on month and by 3.4% year on year.
Pound Sterling to Japanese Yen Exchange Rate is trading in the region of 174.6700
UPDATE
The Japanese Yen to Pound Sterling exchange rate is currently trending in the region of 0.0057.
Despite Japanese data printing negatively on Wednesday the Yen has advanced against the Pound. This is likely to be attributed to waning risk sentiment after Chinese data declined slightly. Also mounting anxieties over the Ebola virus has initiated heightened risk aversion.
Risk sentiment has also taken a negative turn after the International Monetary Fund reported that global growth was uneven and country-specific.
British house price data printed positively on Wednesday, although this has not been enough to tempt traders into investment as safe-haven currencies take precedence. The Halifax House Prices eclipsed the median market forecast of a rise from 0.0% to 0.2%, with the actual data reaching 0.6% in September.
