Pound to Yen Exchange Rate (GBP/JPY) Soft; Yen Appeals as Safe Haven As Russia Invades

August 29, 2014 - Written by Toni Johnson

STORY LINK Pound to Yen Exchange Rate (GBP/JPY) Soft; Yen Appeals as Safe Haven As Russia Invades

The Pound to Yen exchange rate (GBP/JPY) trended lower on Thursday; however forecasts showed the Yen was likely to gain in the currency market against other majors as tensions between Russia and Ukraine escalate and investors seek safe haven assets.

Japan saw a wealth of domestic data publications on Friday affecting the Yen’s exchange rate; conversely, the Pound felt the effect of Consumer Confidence and the Nationwide House PX when it reached publication.

Safe Haven Yen to Become Popular amongst Investors as Russia Moves

Thursday has seen developments in the tensions between Russia and Ukraine, with the prospect of an escalation materialising in the near future. At present, it appears that Russia has deployed troops into the Donetsk region of Ukraine; Ukrainian President Petro Poroshenko has stated: ‘I have made a decision to cancel my working visit to the Republic of Turkey due to sharp aggravation of the situation in Donetsk region... as Russian troops were actually brought into Ukraine.’

US ambassador in Ukraine Geoffrey Pyatt commented: ‘An increasing number of Russian troops are intervening directly in fighting on Ukrainian territory.’ Pyatt continued to state that Moscow was ‘directly involved in the fighting, and had rolled out its ‘newest air defence systems including the SA-22.’ With such a sharp turn in events following yesterday’s supposed peaceful and productive meeting between Russia and Ukraine, the Yen is destined to rise.

Currency expert Adam Cole stated: ‘The Yen is the most secure safe-haven within G10- it’s really the only currency which is trading solidly as a safe-haven at the moment.’ However, the Yen may gain for as long as the situation escalates, and as Ukraine have declared that Russia are enacting an invasion, the Yen may be popular for some time. Industry specialist Eimear Daly commented: ‘Markets have finally been shaken from their slumber and moved into risk-off mode. If Ukraine wants to win the war against separatists they need to do it soon, which means we are entering several months of heightened geopolitical risk.’

Pound Exchange Rate Trading Amid Scottish Independence Debate

The Pound meanwhile is trading amid further Scottish referendum discussion in the three week run up to the vote which will decide if Scotland will become independent. A break away from the UK will shatter the union that’s been in existence for the past 307 years. The Pound had been a favourite amongst the majors for some time before falling significantly after the prospect of rate hikes appeared further away.

Sterling is likely to rally in the near future when rate hike speculation reaches its pinnacle. However, some fears have been raised as to the feasibility of a rise amid the Scotland debate. Standard Bank representative Steve Barrow stated: ‘I would not put the referendum out there as an issue that’s going to break the upward move in the Pound. Sterling will get stronger against the Euro and Yen.’

For now it appears as if the Yen will maintain strength against other peers in its exchange rates, however it is possible that the Japanese Jobless Rate and National Consumer Price Index figures released early Friday morning could alter the safe-haven currency.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Daily Currency Updates Japa Forecasts