GBP to JPY Exchange Rate Strengthens on Japanese Producer Prices
Despite the mounting apprehension surrounding the Scottish bid for independence, the Pound has recovered ground against the Japanese Yen after Japanese data failed to impress and Bank of England Governor Mark Carney hinted at an early 2015 interest rate revision.
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The Pound Sterling to Japanese Yen exchange rate is currently trending in the region of 170.9500.
Monday saw the decline of Sterling across the board after a poll on Scottish independence revealed that the lead had changed hands from the Unionists to the Nationalists. The latest YouGov poll showed that those who are pro-independence had gained a 51% lead over those against; once undecided voters had been removed. In the immediate aftermath of the poll the Pound declined against all of its competitors as traders priced-in the possibility of a divided Britain.
Former British Prime Minister Gordon Brown has sought to win the favour of the undecided voters by offering Scotland greater power over their domestic affairs whilst maintaining the union.
The Japanese Yen struggled on Monday after domestic data indicated a weakening economy. The annualised second quarter Gross Domestic Product was expected to contract by -7.0% but the actual data revealed further declination at -7.1%.
The Pound Sterling to Japanese Yen exchange rate has hit a low today of 170.5400.
Whilst the umbrella of uncertainty still shades investor focus the Pound has continued to trend lower against many of its rivals. However the initial shock has abated a little as Laura Parsons, writing for Future Currency Forecast, explains; ‘the currency’s losses were slightly stymied as various industry experts asserted that Unionists are still likely to prevail when the referendum is held next week’.
Tuesday’s British domestic data has been diverse in terms of results. The Total Trade Balance was forecast to increase from the previous figure of -2.459 billion to -2.1 billion, but the actual data was a disappointing declination to -3.348 billion. However, Manufacturing Production met with the forecast figure of 2.2% and Industrial Production exceeded expectations of 1.3% annual growth in July with the actual data reaching 1.7%. The positive factory output is a sign that the attempt to change from a domestic to an export-based economy may be gathering momentum.
Bank of England Governor Mark Carney spoke in Liverpool on Tuesday morning. He hinted that the BoE is on track to hike interest rates early next year. Sterling has gathered a little momentum since the Hawkish speech in which Carney remarked; ‘Our latest forecasts show that if interest rates were to follow the path expected by markets – that is, beginning to increase in the spring and thereafter rising very gradually – inflation would settle at around 2% by the end of the forecast and a further 1.2 million jobs would have been created’.
The Japanese Yen continued Monday’s downtrend after the Bank of Japan released their minutes from Augusts’ policy meeting. The board decided to continue with the aggressive stimulus, first introduced in 2013, arguing that policymakers need to assess whether sustained 2% inflation is a possibility by 2015.
Japanese domestic data didn’t help prevent a weakening Yen on Tuesday. The Tertiary Industry Index equalled the flat line figure printed previously but was forecast to increase by 0.2%. Perhaps more detrimental, in terms of negative Yen movement, was the result from the Consumer Confidence Index which fell to 41.2 despite anticipation of a rise from the previous figure of 41.5.
UPDATE
The Pound Sterling to Japanese Yen exchange rate is currently trending in the region of 171.9900.
Wednesday morning has seen yet another disappointing set of Japanese domestic data which has compounded the problems from Tuesday’s struggles.
The year-on-year Producer Price Index was forecast to grow by 4.1% in August having registered a score of 4.3% previously. The actual data showed a cool growth of only 3.9%. Machine Orders data produced a positive result at 1.1%, but it hasn’t been enough to halt the Yen’s bearish run.
With an absence of British domestic data the Pound is holding steady ahead of the Bank of England’s high-profile policymaker’s testimony on the August inflation report due on Wednesday afternoon.
