Pound Sterling Holds Ground versus Japanese Yen (GBP/JPY) as Safe-Haven Demand Eases

Modified: Thursday, 8 January 2015 21:50 BST - Written by James Fuller

STORY LINK Pound Sterling Holds Ground versus Japanese Yen (GBP/JPY) as Safe-Haven Demand Eases

The Pound managed to trend higher against the Japanese Yen as safe-haven demand lessened. The Yen softened against the US Dollar on speculation that the US labour market will note improvements this week. Currency expert Akira Moroga commented: ‘The decline in oil has stopped and stocks are being bought back along with the Dollar as risk aversion dissipates.’ Tokyo’s Average Office Vacancies managed to climb 5.47% in December on a monthly basis after November’s 5.55%. However, a weaker Yen has aided some Japanese companies such as Uniqlo which saw its net profit surge by a massive 64% between September and November.

Overseas sales increased with a lower currency; however, concerns surrounding domestic sales prices in Japan have surfaced. Company representative Takeshi Okazaki stated: ‘Rapid falls in the Yen pressure initial costs. We will do our best not to raise prices because customers are highly price-sensitive, but we may need to do so gradually.’

Meanwhile, the UK had another disappointing day which began when Halifax House Prices contracted on the year. The annual figure shrank from 8.1% to 7.8% in December. Furthermore, the Bank of England maintained its current interest rate benchmark of 0.50% for another month. Concern regarding a drop in inflation, struggling wage growth and weakening UK figures have offered the central bank more time before needing to hike rates. Economist Howard Archer said: ‘There is clearly a very real possibility that the Bank of England will delay acting until early 2016.’ The prospect of delayed interest rate hikes has seen the Pound slump in the past, and if the central bank gives any indication that rate hikes won’t occur until next year, Sterling could remain softer.

Furthermore, some of Britain’s largest and most popular retailers like Tesco have suffered losses in recent months. Following months of struggling, the grocer has plans for 43 store closures in the near future out of its 3,300 stores. Chief Executive Officer Dave Lewis stated: ‘We can’t see a way of making them profitable with the tools we have. Investors would expect us to run profitable stores.’ The chain has tried to implement a better customer experience with additions such as store greeters and bagpackers. Lewis continued ‘The investments we are making in service, availability and selectivity in price are already resulting in a better shopping experience.’

Friday could see the Pound to Japanese Yen currency pair experience movement from UK Industrial Production, Manufacturing Production and Trade Balance figures.

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