The Pound (GBP) to Japanese Yen (JPY) exchange rate was trading close to a one-month low on Monday, as demand for safe haven assets remained high as economists fretted over the health of the global economy.
The Japanese Yen was also able to advance to a four week high against the US Dollar after a leading Federal Reserve official said that a worldwide slowdown could cause the US Central Bank to refrain from raising interest rates. The comments dampened demand for the US currency and saw the Yen benefit.
Due to National Holidays closing the Japanese, US and Canadian markets, trade is likely to be relatively muted throughout Monday’s session.
Sterling remains under pressure from last week’s string of disappointing economic data releases and comments made by the Bank of England’s Deputy Governor that the UK economy is not yet strong enough to warrant an increase in interest rates.
Against the Euro (EUR) the Japanese Yen increased to an 11-month high as investors turned cautious on concerns over the health of the region’s economy.
Investors often sell the low-yielding yen in carry trades to fund their investment in higher-yielding currencies and assets. The yen tends to get a boost if worries about global growth leads to a worsening of risk sentiment and triggers an unwinding of such bets.
Pound to Japanese Yen Exchange Rate Forecast
The Yen is forecast to remain trading higher against the Pound for the rest of the session, but could experience volatility due to Goldman Sachs slashing its for Japanese growth forecast as consumers continue to refrain from spending.
‘Consumer sentiment took a turn for the worse last month, following deterioration in the spending data. The economy and prices are in the wrong direction for the BOJ,’ said Tokyo-based economists Naohiko Baba and Yuriko Tanaka.
Risk Aversion Supports Yen
The world is experiencing a period of uncertainty and that is filtering into the economic markets. Worries over the Ebola virus spreading throughout Europe and the USA, the war against the self proclaimed Islamic State, the standoff between the West and Russia and now violence in Hong Kong are all damaging risk sentiment.
The conflict in the Middle East rages on as Kurds battle desperately to save the town of Kobane on the Turkish Syrian border. Today, Turkey agreed to allow the US military to operate out of its airbases. In Hong Kong, scuffles broke out between pro-democracy protestors and masked men.
UPDATE
The Pound Sterling to Japanese Yen exchange rate is currently trending in the region of 171.8972.
Japanese data on Tuesday has been relatively mixed but errs towards the positive. The Domestic Corporate Price Index declined from 3.9% to 3.5% on a yearly basis, but the monthly score equalled the median market forecast of -0.1%. Money Stock M2 + CD met with the previous figure of 3.0% despite the market consensus of a drop to 2.9%. Similarly Money Stock M3 stayed in line with the previous figure of 2.5% in spite of the median market forecast of a drop to 2.4%.
British data, thus far, has printed negatively. BRC Sales Like-for-Like was forecast to drop from 1.3% to 1.0%, but the actual result fell to -2.1%. Sterling is likely to hold in its current position ahead of the inflation data due later on Tuesday.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6083 ,
Pound Sterling,,Euro,1.2689 ,
Pound Sterling,,Australian Dollar,1.8415 ,
Pound Sterling,,New Zealand Dollar,2.0457 ,
US Dollar,,Pound Sterling,0.6217 ,
Euro,, Pound Sterling ,0.7878 ,
Australian Dollar,, Pound Sterling ,0.5429 ,
New Zealand Dollar,, Pound Sterling,0.4885 ,
[/table]
