Pound Sterling to Yen Exchange Rate - GBP JPY Falls on Speculation US Dollar Gains has Been Overdone

Modified: Saturday, 4 October 2014 14:42 BST - Written by Toni Johnson

STORY LINK Pound Sterling to Yen Exchange Rate - GBP JPY Falls on Speculation US Dollar Gains has Been Overdone

The Pound to Yen exchange rate (GBP/JPY) fell on Thursday after the Asian currency received support from the speculation that the US Dollars recent rally has been overdone and on comments made by Japans vice Finance Minister.

On Wednesday the Japanese currency found support from the release of the Tankan report which showed that sentiment amongst Asian manufacturers increased last month.

The report showed that the negative effects of weaker exports were being offset by the low level of the Japanese Yen.

The Japanese Yen to Australian Dollar exchange rate is trading up +0.29% at 0.01052 JPY/AUD.
The Japanese Yen to Canadian Dollar exchange rate is trading up +0.78% at 0.01031 JPY/CAD.
The Japanese Yen to Euro exchange rate is trading up +0.41% at 0.00730 JPY/EUR.
The Japanese Yen to Pound Sterling exchange rate is trading up +1.06% at 0.00573 JPY/GBP.
The Japanese Yen to New Zealand Dollar exchange rate is trading down -0.51% at 0.01173 JPY/NZD.
The Japanese Yen to US Dollar exchange rate is trading up +0.87% at 0.00925 JPY/USD.

Declines for the Yen slowed after economists said that its rate of decline the currency would reach absurdly low levels against the US Dollar over the coming months. That was highlighted again on Thursday as speculation increased that the US currencies recent sharp rises have been overdone by traders.

‘The US Dollar is consolidating after reaching 110 Yen, and other currencies which were a bit oversold against the US Dollar are being bought back. Investors are adjusting their positions ahead of the ECB meeting as the US Dollars recent rise has been quite rapid,’ said Marito Ueda, senior managing director at a currency company.


Comments made by Noubuhide Minorikawa, Japans deputy Finance Minister also aided the Yen in making its second consecutive day of gains. Mr Minorikawa said that the weakness of the Japanese currency is starting to hurt some companies as it is driving up energy prices.

With much of Japan’s nuclear power plants still out of action, the island nation relies heavily on external energy imports. One bright spot was news that the price of oil fell to its lowest level in 17-months.

Sterling fell by more than 0.60% against the Yen even as domestic economic data came in better than forecast.

According to the latest Purchasing Managers Index published by Markit Economics the UK’s Construction sector expanded at its fastest pace in eight months last month. The index rose to a reading of 64.2 in September, up from the reading of 64 recorded in the preceding month. The figure
was better than economists had been expecting.

The Yen was also finding support from safe haven demand as concerns increased over the pro-democracy protests in Hong Kong and news that pro-Russian rebels renewed an offensive against Ukrainian government forces in Donetsk. The aggressive action of the rebels throws a ceasefire into question and increased concerns that it could break down entirely.

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