Pound Sterling to Yen (GBP/JPY) Exchange Rate Advanced after Upbeat UK Retail Sales

November 20, 2014 - Written by David Woodsmith

STORY LINK Pound Sterling to Yen (GBP/JPY) Exchange Rate Advanced after Upbeat UK Retail Sales

The British Pound to Japanese Yen (GBP/JPY) exchange rate climbed higher after UK Retail Sales figures showed growth in at least one aspect of the economy.

Unfavourable data has weighed heavily on the Pound exchange rate in recent months, causing hopes for interest rate hikes taking place in the near future to diminish.

Head of Retail Ian Geddes commented: ‘A stronger than expected month, albeit driven by discounting, will bring some cheer as we start the run-up to Christmas.’ UK Retail Sales grew to 4.6% on the year in October from 2.8%. Economists’ hadn’t expected such a large jump, with forecasts for a smaller leap to 4.2%.

The Pound to Yen exchange rate converts +0.15 per cent higher at 1 GBP is 185.44613 JPY.
The Euro to Yen conversion rate is -0.07 pct lower at 148.04961 EUR/JPY.
The US Dollar to Yen exchange rate converts -0.04 per cent lower at 1 USD is 118.10050 JPY.
The Hong Kong Dollar to Yen exchange rate is -0.04 pct lower with a conversion rate of 1 HKD equals 15.22797 JPY.

Uncertain Japanese Economy Causes Yen to Pound & Dollar Exchange Rate Weakness

The Japanese Yen (JPY) exchange rate has suffered in recent weeks after it emerged that the Japanese economy had slipped into recession.

The recession was caused by a sales tax increase in April, orchestrated by Prime Minister Shinzo Abe. As a result, the Yen has reached a seven-year low against the US Dollar (JPY/USD) while both the political and economic state of Japan hangs in the balance.

Because of the recession, Prime Minister Abe called for a snap election in December and postponed the sales tax hike which was scheduled for next year. The Japanese economy has stagnated for close to two decades and Abe’s plan to kick-start it into growth hasn’t worked as of yet. Abe stated: ‘I realise this election will be tough, but I need to hear the voice of the people. I will step down if we fail to keep our majority because that would mean our Abenomics is rejected.’

Prime Minister Abe is hoping to gain support in the election and backing on his monetary policies which include severe government spending, extreme monetary easing and tax decisions which have been dubbed ‘Abenomics’. Abe continued: ‘Some people say Abenomics has failed or it’s not performing well. But then what should we be doing?’

Pound to Yen Exchange Rate Forecast: Upcoming UK and Japanese Data that may affect GBP/JPY

Thursday also saw Markit’s flash Japanese Manufacturing Purchasing Managers Index (PMI) fall to 52.1 from 52.4 despite economists’ forecasts to grow to 52.7. Despite the index remaining above the 50.0 mark indicating growth, the fall has come at a bad time for the Japanese Yen. With no further Japanese figures out this week, movement in the GBP/JPY exchange rate will be reliant on global developments and UK data releases. Friday will see UK Public Sector Net Borrowing statistics published as well as Bank of England (BoE) official Davis Miles speak in Bristol at an economics conference.

Poound Sterling to Japanese Yen (GBP/JPY) Exchange Rate Gets Support

The Bank of England offered the Sterling exchange rate some support this week when the Monetary Policy Committee (MPC) had another split vote on the subject of raising interest rates. Martin Weale and Ian McCafferty continued to be hawkish in their stance and voted for the immediate hike in interest rates in the UK, whereas BoE Governor Mark Carney and the other six policymakers voted against.

Any BoE statements that have a hawkish tone could encourage the Pound to rally.

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