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Pound Sterling Japanese Yen (GBP/JPY) Exchange Rate Steadily Increases as Japanese Consumer Confidence Slides Further

January 8, 2019 - Written by John Cameron

GBP/JPY Exchange Rate Volatile as Japanese Consumer Confidence Falls Third Month in a Row

The Pound Sterling Japanese Yen exchange rate has been steadily climbing since the beginning of this week’s session, with the pairing currently trading at a rate of ¥139.02.

This morning it is likely the Japanese Yen was dented by December’s consumer confidence figures which showed a further contraction from the previous month, falling from 42.9 to 42.7, which marks the third month in a row that this figure has fallen.

The Pound also appreciated after the UK saw some positive data this morning, as the Halifax house price index showed growth.

House prices increased by 2.2% in November from the previous month’s figure of -1.2%, and to 1.3% compared to November 2017, with the average house price sitting at £229,729.

GBP/JPY Exchange Rate Increases Despite Poor UK Car Sales Data

Monday saw a steady increase in the Pound Japanese Yen (GBP/JPY) exchange rate, despite little UK economic data being released.

Sterling had little help from the poor car sales figures, which contracted by -5.5% in December compared to the previous year.

Nevertheless, the Pound rose to a one-week high yesterday, as traders prepared for the UK Parliament to return from their recess today, and continue negotiations of the Brexit withdrawal act.

GBP/JPY Exchange Rate Increases despite Elevated Japanese Business Confidence

Monday saw the release of the Japanese Markit services PMI for December, which revealed that growth had slowed, falling to 51.0 from 52.3.

Despite the decline, the accompanying report found that while business activity growth had eased, job creation has accelerated to a three-month high, and business confidence remains elevated, although this did little to stop the Pound making gains on the Yen.

Joe Hayes, an economist at IHS Markit, stated:

‘Positive survey data from the manufacturing sector were not mirrored by Japan’s dominant service-providing industry in December, where business activity increased at the weakest pace since May if the natural-disaster-hit September is discounted. The survey also pointed to abating demand pressures, as private sector sales increased only mildly on the month.

‘Nonetheless, composite level data points to a relatively solid pace of expansion over the last three months of 2018, suggesting that the Q4 GDP print should bring a bounce-back in growth.’

GBP/JPY Exchange Rate Outlook: Will Brexit Negotiations Drag Down the Pound?

With Parliament due to reconvene today and continue to debate the Brexit withdrawal act, it seems likely that there will be increasing volatility for Pound Sterling exchange rates.

With the date of the ‘meaningful vote’ being announced as 15 January, it seems likely that the closer it gets to this date, the more volatility there will be for the Pound, which could see the JPY/GBP exchange rate claw back some of its previous losses.

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