Pound Yen Exchange Rate Forecast: GBP JPY Bearish as Japan's Economy Expands

May 15, 2014 - Written by Toni Johnson

STORY LINK Pound Yen Exchange Rate Forecast: GBP JPY Bearish as Japan's Economy Expands

Wednesday’s dovish Bank of England inflation report and today’s impressive Japanese growth data left the Pound to Yen exchange rate (GBP/JPY) in a stronger position.

The Pound Sterling (currency:GBP) recorded widespread declines yesterday as the UK’s employment report showed a smaller-than-forecast drop in joblessness and slower-than-expected wage growth.

Further Pound losses occurred after the BoE published its inflation report. The central bank opted to leave its growth and inflation forecasts unchanged, but stressed that the remaining slack in the labour market meant that policy makers were in no hurry to raise interest rates.

As investors had been betting that the recent stream of upbeat UK economic reports would push the BoE into hiking interest rates earlier than projected, the dovish result saw Sterling decline.

The Pound Sterling held losses overnight.

Yen boosted by strong growth data

Meanwhile, the Yen (JPY) was boosted by surprisingly strong growth data for Japan. In the first quarter Japan’s economy expanded by 1.5 per cent quarter-on-quarter. Economists had envisaged growth of 1.0 per cent. On the year, the economy grew by 5.9 per cent – considerably more than the 4.2 per cent growth forecast. Business spending was up 4.9 per cent and consumer spending climbed by 2.1 per cent.

After the report was released Japan’s Economy Minister, Akira Amari, commented; ‘We are progressing decisively to escaping deflation.’

However, fourth quarter growth was negatively revised to 0.1 per cent QoQ and 0.3 per cent YoY.

GBP to JPY exchange rate forecast awaits Japan's industrial production data

A lack of economic data for the UK limited movement in the GBP/JPY pairing during the local session, but the Yen retained the upper hand. During the Australasian session Japan’s industrial production figures could have an impact on the GBP/JPY exchange rate.

Relevant Yen Exchange Rates Today (Money Transfers to Japan) - 15 May 2014

- The Pound Sterling to Japanese Yen exchange rate is trading up +0.04% at 170.74287 GBP/JPY.
- The Euro to Japanese Yen exchange rate is trading down -0.28% at 139.22272 EUR/JPY.
- The US Dollar to Japanese Yen exchange rate is trading up +0.11% at 101.89650 USD/JPY.

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TAGS: Forecasts