Pound to Yen (GBP/JPY) Relatively Static after UK Data and Japanese Central Bank Statements

April 30, 2015 - Written by Ben Hughes

STORY LINK Pound to Yen (GBP/JPY) Relatively Static after UK Data and Japanese Central Bank Statements

GBP/JPY Currency Pair Trading in Narrow Range

The Pound remained in a tight range against the Japanese Yen following statements from the Japanese central bank on Thursday. The Yen exchange rate managed to climb against some major peers when the Bank of Japan failed to expand stimulus as expected. Japan’s easing programme is already massive and any further expansion could see the Yen sink. However, some experts believe the Bank of Japan may introduce further easing later in the year.

Strategist Shuji Tonouchi commented: ‘We expect the BoJ to ease policy again in October and we are not likely to change our view. We expect consumer prices to rise after oil prices stop applying downward pressure, but we doubt that prices will rise quickly.’

The BoJ made adjustments to its inflation target timeline and downgraded both its inflation and growth outlook for both 2015 and 2016. Inflation is now expected to reach 0.8% rather than 1.0% in the 2015 fiscal year, while GDP will hit 2.0% rather than the 2.1% expected.

BoJ Governor Haruhiko Kuroda commented: ‘It is true that the timing for achieving the 2.0% inflation target has been delayed. But price trends are improving steadily and that is expected to continue. We don’t see additional (easing) measures being necessary at this point.’

UK GDP Comes in Below Forecast, Pound Declines

Meanwhile, the UK economy has experienced a relatively quiet week for data with the main event taking place on Tuesday with Gross Domestic Product figures. The UK ecostat slipped from 3.0% to 2.4% on the year in the first quarter, rather than coming in at 2.6% as economists expected.

Thursday saw UK Consumer Confidence remain at 4 in April, a reassuring development ahead of the UK general election which has the potential to cause a ruckus in the market.

The UK political debate is heating up just a week away from the general election and Thursday saw claims that the current Conservative government plans to cut £8bn in welfare, which will include child benefits.

Liberal Democrat representative Danny Alexander commented: ‘I am lifting the lid on this now because the Conservatives are trying to con the British People by keeping their planned cuts secret until after the election. It’s clear from our time in government that the Tories’ target will be slashing support for families.’

The prospect of a hung parliament has been weighing on the Pound exchange rate; however, if the Conservatives remain in power it’s likely that the Pound will be offered some stability.

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