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GBP JPY Exchange Rate Plummets as Japan?s Trade Balance Rallies

March 22, 2017 - Written by John Cameron

The GBP JPY exchange rate plummeted this morning following the release of Japan’s latest Trade Balance figures

Pound Japanese Yen (GBP JPY) Exchange Rate Falls as Japanese Exports Spike



The Pound Japanese Yen (GBP JPY) exchange rate softened on Wednesday following the release of positive trade figures from Japan.

Japan’s Ministry of Finance (MOF) reported that the domestic Trade Balance printed a ¥813.4bn surplus in February, rallying from a ¥1087bn deficit at the start of the year.

While the surplus fell slightly behind expectations that it would reach ¥822bn markets were impressed by the rebound in exports as they surged by 11.3%, up from just 1.3% in January.

The rally was largely attributed to an uptick in exports to China as demand for Japanese goods surged as the country returned from Lunar New Year celebrations in early February.

However the Yen’s gains were muted somewhat by worries that increasing US trade protectionism could create tensions between Japan and its second largest trading partner.

Tomoyuki Ota, head of the economic research department at Mizuho Research Institute said;

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‘Japanese policymakers must be sensitive about trade surplus with the United States. The trade surplus is not at an alarming level, but is historically very low. However, such a logical argument may not get across to Trump.’

Souring Household Sentiment Weighs on Pound



The Pound was also pressured this morning by a report that UK households are feeling increasingly pessimistic about their economic futures.

The Markit Household Finance Index reports that Household sentiment is at its lowest levels since November 2013 as family finances are being stretched thin by rapidly rising inflation and anaemic wage growth.

Tim Moore, senior economist at IHS Markit said;

‘UK households reported greater pressure on their financial wellbeing in March, as rising inflation has started to erode incomes and reduce cash available to spend. On average in the first quarter of 2017 survey respondents have reported the sharpest increase in their everyday living costs for three-and-a-half years.’

The outlook of UK consumers has also been negatively impacted by Britain’s decision to leave to EU as the uncertainty of Brexit and its effect on jobs and the economy causes some families to worry.

GBP JPY Exchange Rate Forecast: UK Retail Data Ahead



The GBP JPY exchange rate may rally on Thursday following the release of the UK’s latest retail figures, with sales forecast to have grown by 0.4% in February following a shock contraction at the start of the year.

Meanwhile the Japanese Yen may advance further on Friday as analysts predict that Japan’s Manufacturing PMI will show that activity rose in March possibly showing the sector’s seven consecutive month of growth.

Current Interbank Exchange Rates



At the time of writing the GBP JPY exchange rate was trending around 138.7200 and the JPY GBP exchange rate was trending around 0.0072.
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