Pound Sterling to Japanese Yen (GBP/JPY) Exchange Rate Levels out on Election Speculation

November 13, 2014 - Written by Toni Johnson

STORY LINK Pound Sterling to Japanese Yen (GBP/JPY) Exchange Rate Levels out on Election Speculation

Although the Pound (GBP) posted extensive declines against all of its most-traded currency counterparts on Wednesday, the British currency was able to trend around the day’s opening levels against the Japanese Yen (JPY) as the safe-haven asset came under pressure of its own.

Wednesday proved to be a day of heavy volatility for the Pound, with the UK’s employment figures and the Bank of England’s inflation report causing first gains, then losses.

The latest Yen rates today:

The Pound to Japanese Yen exchange rate today is converting -0.1 per cent lower at 182.10729 GBP/JPY.
The Euro to Japanese Yen exchange rate today is converting +0.52 per cent higher at 144.44656 EUR/JPY.
The US Dollar to Japanese Yen conversion rate is +0.1 pct higher at 115.72250 USD/JPY at 120.19620.
The Canadian Dollar to Japanese Yen rate today is converting -0.1 per cent lower at 102.00309 CAD/JPY.

Although the UK economy was shown to have added fewer-than-projected positions in the three months through September, the nation’s unemployment rate held at a six-year low and the pace of wage growth finally pushed above the rate of inflation.

However, industry expert Howard Archer did note; ‘This is still really more to do with low inflation than markedly improving earnings.

However, earnings growth did take a much-needed decent step in the right direction in September.

The data initially supported the case for the Bank of England (BoE) increasing interest rates sooner rather than later, but the prospect of a spring rate hike was then dashed by the BoE’s inflation report. While the BoE’s growth projections for the UK are still positive, the central bank envisages inflation running well below its target of 2% for the next three years. The Pound subsequently plummeted against the majority of its currency peers.

Japanese Yen Declines, GBP/JPY Downtrend Pauses

On Thursday the Pound extended declines against several of its rivals after a UK house price report came in lower-than-forecast.

However, losses in the GBP/JPY pairing were limited as the Japanese Yen fell against 15 of its 16 most-traded counterparts. As well as losing ground against the Euro and Australian Dollar, the Yen tumbled close to a seven-year low against the US Dollar (USD/JPY) amid bets that a snap election has been called by Japanese Prime Minister Shinzo Abe.

The speculation that an election could be held on December 14 saw forex expert Masato Yanagiya assert; ‘The market has taken the idea of a delay in raising the sales tax as a positive, so stocks have been bought and Dollar-Yen has risen. Once we get an actual announcement, there’s a good chance we’ll see a further reaction in the market.’

The Yen was little changed following the release of Japanese Capacity Utilisation and Industrial Production data. Industrial production was shown to have increased by 2.9% on the month in September rather than the 2.7% initially estimated.

On the year, industrial production was up 0.8%, beating the first estimate of 0.6%. Capacity Utilization climbed 3.6% on the month in September following the previous month’s -1.7% decline.

With Japanese data lacking before the weekend, any additional GBP/JPY movement will be occasioned by the reports relating to the potential election and the UK’s Construction Output data.

The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate was trading in the region of 1.82.1700.

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