Pound Japanese Yen Exchange Rate (GBP JPY) Tumbles Following G7 Comments

Published: Wednesday, 13 February 2013 09:00 BST - Written by Ben Hughes

STORY LINK Pound Japanese Yen Exchange Rate (GBP JPY) Tumbles Following G7 Comments

The Pound endured yet another horror session against the euro yesterday. Price action for the pair during the early part of the day was played out in front of the backdrop of yesterday afternoon’s fast-impending face-to-face between European Central Bank President Mario Draghi and under-pressure Spanish Prime Minister Mariano Rajoy.

The interest which Spain’s government was forced to pay on its one year treasury bills rose significantly at yesterday morning’s debt auction, signalling nervousness from bond market participants regarding the potential upshot of Rajoy’s meeting with Draghi. However, these fears failed to suppress the go-ahead euro, which registered healthy gains against Sterling, sending the GBP EUR exchange rate tumbling down into the 1.1500s. The pair had been residing in the mid-1.1800s when the currency markets re-opened for business during Monday’s Asian session.

Elsewhere, the value of the Japanese Yen spiralled following comments from a G7 official yesterday regarding recent price action for the Japanese currency. The spokesman for the group of seven leading global economic powers voiced his concern over ‘excess moves in the Yen’, in recent months. The Japanese tender lost around 25% of its value against the euro during the final three months of last year, leading analysts to suggest that Japan’s central bank was dumping Yen-denominated assets as part of an opening gambit in a global currency war. Needless to say, the authorities are keen to stamp out any such action – expect an announcement on this at the weekend’s G20 summit in Moscow.

Looking ahead to today’s session, this morning’s highlight comes in the form of the publication of the latest Bank of England inflation report. The release is expected to predict that UK price rises are set to continue to remain above the government’s 2.0% target for the next 1-2 years. Such an announcement could trigger some support for Sterling, given the impact it would have upon investors’ thoughts on the chances of more Quantitative Easing for the British economy.

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