Pound Falls against Japanese Yen (GBP/JPY) as UK Data Weighs Heavily

April 23, 2015 - Written by Tim Boyer

STORY LINK Pound Falls against Japanese Yen (GBP/JPY) as UK Data Weighs Heavily

GBP/JPY Declines after UK Sales Data

The Pound softened against a wide range of majors, including the Japanese Yen, on Thursday after UK data disappointed quite significantly. UK Retail Sales excluding automobiles were expected to rise by 0.5% in March with sales including vehicles climbing 0.4%. However, the actual ecostats noted a -0.5% fall in both gauges on account of reduced fuel spending. The Office for National Statistics suggested that the 6.2% fall in petrol station sales pulled down the overall figure.

Industry expert Keith Richardson commented: ‘Even with continued falls in fuel and food prices, consumers are responding to this current period of uncertainty by being just as careful about their own spending as they have been for the past few years. Despite the fact that Mother’s Day fell in March and Easter fell early in April, this wasn’t enough to bring forward any boost in spending into March, doing nothing to allay fears that while consumers may have a little more money in their pockets, they are spending it on leisure treats like eating out and going on holiday, rather than on High Street goods.’

Meanwhile, other economists have taken a more optimistic view of the figure, suggesting that improving wage growth and continued lower inflation should help pick up spending in coming months. However, wage growth has been notoriously lethargic in the past several years and there are many questions being raised about how improved pay packets really are.

Japanese PMI Declines, Yen Holds Firm

The Japanese Yen has had an interesting few days of trading this week with exchange rate fluctuations occurring on account of several pieces of data. Japan’s Manufacturing PMI recorded losses on Thursday—a surprise for many economists who had estimated gains would occur. The April ecostat slipped from the previous month’s 50.3 to 49.7 leaving expectations of a more favourable 50.7 hanging in the wind. The figure resides below the 50.0 benchmark which separates expansion from contraction and April’s reading marked the first negative reading in the past 11 months.

Economist Amy Brownbill stated: ‘Latest data signalled worsening operating conditions in the Japanese manufacturing sector. New orders continued to fall, while manufacturing production decreased for the first time since July 2014.’

Friday could be another interesting day for the Yen exchange rate with the release of the Japanese Small Business Confidence figure. However, Pound movement is likely to be muted in comparison with a lack of UK data out for release.

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