Pound Sterling to Japanese Yen (GBP/JPY) Exchange Rate Holds before Japan’s GDP Report

The Pound Sterling (GBP) to Japanese Yen (JPY) exchange rate firmed on Monday as demand for the safe haven Yen eased slightly as concerns over a possible military intervention by Russia in Ukraine eased over the weekend, gains are likely to be mixed however as concerns over the political situation in Iraq rise.

Early in the session, the Bank of Japan chose to hold fire on expanding its massive stimulus programme and said that the world’s third largest economy is continuing to recover, despite the nation’s export picture declining.

‘Japan’s economy has continued to recover moderately as a trend, although the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike has been observed. Factory output has shown some weakness, whilst jobs and wage growth was improving steadily,’ the Bank of Japan said in its statement.

The Yen was under pressure after the central bank said that whilst factory output is likely to rise, the production of cars and computers might remain weak due to slowing demand.

Demand for the Japanese currency eased slightly on Monday as concerns over the possibility of open conflict between Russia and Ukraine softened.

Geopolitical risks had caused investors to embark on a bout of profit taking. As a result Sterling fell sharply last week.

In the week ahead, investors will be continuing to monitor geopolitical risk, while preliminary data on second quarter growth from the euro zone and Japan will be closely watched.

Markets watchers will also be looking ahead to Wednesday’s inflation report from the Bank of England and the U.S. report on retail sales.

UPDATED 09:30 GMT 12 August, 2014

Pound Sterling to Japanese Yen Exchange Rate Unchanged by Production Stats

On Tuesday the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate was trending in a narrow range, having experienced very limited movement following the publication of Japan’s Industrial Production figures.

Japanese Industrial Production was shown to have fallen by -3.4% in June on a month-on-month basis – slightly more than then initial estimate of -3.3%.

On the year industrial production was up 3.1%, down from the preliminary forecast for an annual increase of 3.2%.

Tomorrow’s second quarter growth figures for Japan and the Bank of Japan’s meeting minutes could cause more notable Pound Sterling to Japanese Yen (GBP/JPY) exchange rate movement tomorrow.

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