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GBP JPY Exchange Rate Fluctuates as Markets Assess the Latest Economic Data

December 28, 2017 - Written by John Cameron

The Pound Japanese Yen (GBP JPY) exchange rate is trading in a wide range this morning as investors reflect on data released by both markets.

Japanese Yen’s (JPY) Bolstered by Jump in Retail Sales



The Japanese Yen was strengthened overnight on Wednesday with the release of some better than expected retail sales figures.

According to government data retail sales growth rebounded strongly in November, rallying from -0.2% to 2.2%, sailing past expectations or a more modest rise to 1.2%.

However some analysts are pessimistic about the chances of retail sales remaining robust over the coming months, especially given the lacklustre wage growth currently being experienced by households.

Yasutoshi Nagai, chief economist at Daiwa Securities Co said;

‘Consumption is strong and I think the recent weakness was due to bad weather. But it’s hard to think the momentum will be maintained while wages are not rising much.’

Meanwhile further bolstering the Yen was the publication of Japan’s industrial production figures for November, with Japan’s trade ministry reporting that output rose 0.6% last month, up from predictions that growth would hold at 0.5%.

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The uptick was largely supported by increased overseas demand, which in turn supported the uptick in industrial activity.

However despite the positive data the future outlook from economists was far less optimistic as they predict that production will dip again at the start of 2018.

Masaki Kuwahara, senior economist at Nomura Securities Co said;

‘November’s industrial production data weren’t particularly surprising, but some of next year’s forecasts are dropping -- I’d like to take a closer look at the significance of that. If you look at the numbers as they are, there’s a possibility that production will drop a little at the start of next year.’

Pound (GBP) Rallies as Mortgage Approvals



Despite its early losses in today’s session the Pound was able to pick itself back up at the start of European trading this morning part in thanks to the release of the UK’s latest mortgage figures.

According to data published by the British Bankers' Association (BBA) the number of monthly mortgage approvals slipped from 40,417 to 39,507 in November.

While the number of approved home loans fell more than expected last month the Pound was still able to advance as analysts and investors alike reflected on 2017’s data, with markets remain optimistic as it was revealed that mortgage lending was up 9% on the year.

Eric Leenders , Managing Director of Commercial and Personal Finance said;

‘Today’s data reflects a continuing trend that we have seen throughout 2017: ongoing activity in the mortgage market and a shift towards more flexible and affordable personal credit options.’

‘Increasing numbers of first-time buyers, low interest rates and a competitive marketplace have helped build up mortgage activity through the year, with gross lending standing at nine per cent higher than at the same point in 2016.’

However one source of doubt came from the accompanying business borrowing figures that revealed that firms appear to be reluctant to borrow more, likely do the uncertainty of Brexit.

Leenders added;

‘Business borrowing has continued to moderate through 2017, with the major sectors of manufacturing, wholesale and retail business showing only modest annual growth, while construction and property-related sectors have contracted their bank borrowing over the year.’

GBP JPY Forecast: UK PMI Data to Impress Next Week?



Looking ahead the GBP JPY exchange rate may be a little directionless for the remainder of this week due to a lull in data over the holiday period.

However next week will see the release of the UK’s latest PMI figures, which could help to strengthen Sterling should December’s data continued to trend higher.

Meanwhile the Japanese Yen may struggle a little over the coming week as the currency is hit by thinned trading volumes as domestic investors take time off for the New Year celebrations.

Current Interbank Exchange Rates



At the time of writing the GBP JPY exchange rate was trending around 151.8140 and the JPY GBP exchange rate was trending around 0.0066.

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