Pound Sterling to Japanese Yen Exchange Rate Advances on Scottish Vote, But Retraces

September 18, 2014 - Written by Admin

STORY LINK Pound Sterling to Japanese Yen Exchange Rate Advances on Scottish Vote, But Retraces

The Pound to Yen exchange rate (GBP/JPY) made gains on a session which had been forecast to see volatile trading for the UK currency. With Scotland voting on whether to become an independent country and the outcome anyone’s guess, forex investors were being cautious.

Ealier in the week, Sterling found support from the release of data, which showed that UK retail sales increased at a faster pace than expected in August as new EU rules spurred on the panic buying of vacuum cleaners.

According to the Office for National Statistics (ONS) retail sales volumes rose by 0.4% last month and were 3.9% higher than a year ago. The impact of the European Union announcing a law that would ban the sale of high-powered vacuum cleaners saw household good sales surge by 12.7%.

‘Electrical appliance stores also contributed to the increase in the quantity bought in household goods stores. Feedback from retailers suggested that sales were increased as consumers sought to buy high powered vacuum cleaners before the EU energy saving regulation came into force at the end of August,’ said the ONS.

Further gains were restrained after a separate report published by the Confederation of British Industry (CBI) suggested that the UK’s factory sector has suffered a setback. According to the report many firms have reported that orders have fallen below normal levels and export orders declined significantly to their weakest level since January 2013.

Just 14% of firms said their export order books were above normal and 38% said they were below normal. That give a ‘balance’ of -24%, which is a 21-month low. The uncertainty generated by the Scottish Referendum is thought to be a major cause for the drop.

‘Against a backdrop of acute political uncertainty at home and abroad, exports orders for UK manufacturers are faltering, which is disappointing. However, it’s encouraging that output growth has remained solid and firms expect production to rise strongly in the next quarter,’ said CBI Deputy Director-General Katja Hall.

The Japanese Yen meanwhile fell despite trade data coming in better than forecast. In Japan August, trade data showed a deficit of ¥948.5 billion, below a forecast of a deficit worth ¥1.029 trillion, but still the 26th straight monthly shortfall.

Bank of Japan Governor Haruhiko Kuroda said that Japan’s economy is expected to continue its moderate recovery as the weak Yen continues to offer support to the nations exporters.

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