Pound to Yen Exchange Rate (GBP JPY) Steady Today, Yen Higher vs Euro, Holds vs US Dollar

August 21, 2014 - Written by James Fuller

STORY LINK Pound to Yen Exchange Rate (GBP JPY) Steady Today, Yen Higher vs Euro, Holds vs US Dollar

The British Pound to Japanese Yen exchange rate (GBP/JPY) held close to the Friday's open by close of play on the forex markets, despite Sterling suffering once more against a basket of currencies.

The Yen however has softened in its currency pairings against other majors in anticipation of influential events this week such as the Jackson Hole meeting which will see central bank giants convene to discuss significant matters such as the revaluation of labour market dynamics and monetary policy which will no doubt rock the currency market. The GBP to JPY exchange rate seems likely to remain soft until the UK economy can prove supportive enough for the Pound to gain a backbone.

Yen Strength Weaker in Currency Market Awaiting Jackson Hole

The Japanese Yen saw promise on Wednesday, following the release of Japanese Merchandise Trade Export data attaining higher than expected figures. Exports rose by 3.9 in July, a shade higher than the forecast 3.8 which shows that the demand from other countries for Japanese produce is improving; especially considering the June figure showed a 1.9% contraction. Economist Harumi Taguchi commented: ‘Major contributors to the increase were motor vehicles, metal working machinery and scientific optical instruments, which were partially offset by declines for visual apparatus, computer parts and other items.’ However, the Japanese Trade Balance widened unexpectedly in July causing the deficit to expand to an unfavourable 964 billion Yen.

Japan’s Imports reached 8.4 in June, a rather high level of imports, whilst July showed less at 2.3. HSBC economist Izumi Devalier stated: ‘We had seen strong imports in the previous month so we had expected it to come down a bit but it looks like imports are recovering quite quickly though consumption remains weak in Japan. I think consumption still remains a big worry. On the export side, it is a relief that July exports rebounded but it’s too early to say whether that rebound is going to continue for the rest of the quarter.’

Investors are waiting for the outcome of the Jackson Hole meeting in Wyoming this Friday, when highly influential currency experts such as Janet Yellen from the US Federal Reserve and Mario Draghi from the European Central Bank, will discuss the state of monetary policy and economic health. The Yen has fallen in anticipation of Yellen’s statements which are expected to be slightly more hawkish than they have been previously. Expert in the field Takatoshi Itoshima expressed his opinion: ‘People are excited about the Yen’s level, and optimism is rising as the next focused event, Jackson Hole, is nearing.’

Pound Weakens After Turbulent Week of Data Publications

The Pound however has had a bumpy ride this week, with a seemingly more hawkish Bank of England encouraging a short rally for the Pound initially. Following this jaunt in gains, the UK produced poor Retail Sales figures today which have left the Pound floundering once again in the currency market. Retail Sales only rose by 2.6% in July, despite economists forecasting a rise of 3.1% year-on-year. Retail Sales month-on-month however grew slightly more than expected, with a rise of 0.5%, instead of the 0.4% economists were expecting.

The rise in retail sales are owed mainly to more demand for clothing and footwear in the UK, as supermarket stores battle it out to appear attractive to consumers. Marks and Spencer, who remain Britain’s largest clothing retailer has stated that even though there has been ‘some improvement in consumer confidence, market conditions remain challenging.’

Next week however will prove a relatively quiet week for the UK by way of data releases, with only Friday showing the publication of Augusts’ Consumer Confidence, and figures for the Hometrack Housing Survey. Friday will also prove highly influential for the Yen with data releases such as the Japanese Jobless Rate and National Consumer Price Index figures published.

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