GBP/JPY Exchange Rate Declines Fractionally on Sterling Overvaluation
Business Secretary Vince Cable announced that British economic growth is struggling against an overvalued Pound and the strength of the domestic currency, in turn, has added to inflationary pressure. Sterling has lost ground against the majority of its most traded currency peers as a result. The Japanese Yen has performed poorly of late amid speculation that the Bank of Japan will continue unprecedented monetary easing.
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The Pound Sterling to Japanese Yen exchange rate is currently trending in the region of 174.9600.
Despite the nation’s Services and Composite PMIs advancing from previous figures, the Japanese Yen declined on Friday as US jobs data pushed the US Dollar higher. The Japanese Services PMI increased from 49.9 to 52.5; bringing it out of contraction and into growth levels. Also the Composite PMI ticked upwards from 50.8 to 52.8.
Sterling softened on Friday from a combination of disappointing data and dovish comments from Bank of England officials. Deputy Governor Ben Broadbent and the newest policymaker Kristin Forbes both suggested that issues with inflation are holding back economic growth and therefore hampering the normalisation of monetary policy. Further declines came by way of a falling Services PMI.
The Pound Sterling to Japanese Yen exchange rate has hit a low today of 174.4800.
Another comment relating to Sterling overvaluation and inflationary pressures has seen Sterling demand falter on Monday. Cable said; ‘Arguably, the Pound is overvalued by 10 to 15 percent on a trade-weighted basis’.
Sterling declination was compounded after yearly New Car Registrations cooled from 9.4% to 5.6% in September.
An absence of Japanese data on Monday has seen the Yen generally decline against the majority of its currency rivals. Bank of Japan Governor Haruhiko Kuroda will hold a news conference after a two-day meeting with his board starting on Monday. ‘If Kuroda again states there are few demerits to a weaker Yen, it would be a catalyst for more Yen selling,’ said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo. Kevin Buckland, writing for Bloomberg, stated; ‘The BoJ will increase stimulus this year, according to about a quarter of the 33 economists surveyed by Bloomberg News between Sept. 26 and Oct. 2. An additional 42 percent expect an expansion of quantitative easing some time after the turn of the year’.
Forecast for the Pound to Japanese Yen Exchange Rate
Tuesday’s BoJ Monetary Policy Statement will be likely to provoke market volatility, not least if they opt to loosen monetary policy further still. The Coincident Index and Leading Index will also be of interest to those invested in the Japanese Yen.
The British Gross Domestic Product Estimate will be the most influential economic data publication on Tuesday. The Bank of England Credit Conditions Survey, Industrial Production and Manufacturing Production figures also have the potential to spark Sterling volatility.