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Pound Sterling Japanese Yen (GBP/JPY) Exchange Rate Rises as UK Economy Expands Faster than Forecast

April 10, 2019 - Written by John Cameron

Pound Japanese Yen (GBP/JPY) Exchange Rate Rises on Better-than-Forecast UK GDP

The Pound Sterling Japanese Yen (GBP/JPY) exchange rate rose, and the pairing is currently trading at an inter-bank rate of ¥145.6480.

Sterling likely rose as data released on Wednesday revealed that February’s GDP rose by 0.2% despite expectations that the economy would remain stagnant.

The rise was largely driven by the services sector.

February’s rise added with January’s unusually strong gain of 0.5% points towards the economy having expanded by 0.4-0.5% in Q1 2019.

On an annual basis, in the quarter leading to February, the economy expanded by 2%, which likely buoyed Sterling as this is the highest rate of growth since late 2017.

The data has been cautiously welcomed by economists, and Ian Stewart, Chief Economist at Deloitte said:

‘The UK is proving more resilient than expected in the face of a global slowdown and Brexit headwinds. The pace of growth could be choppy, but the UK is likely to grow about the same pace as the Euro area this year.’

Sterling (GBP) Rises as UK Manufacturing at Highest Level in Over a Decade

The Pound (GBP) rose against the Japanese Yen (JPY) as both UK manufacturing and industrial production rose higher than expected in February.

Industrial production rose by 0.6% and manufacturing production surged by 0.9%, likely on the back of Brexit stockpiling.

Manufacturing levels are now at its highest since April 2008.

Commenting on the data, Chief Economist at Make UK, Seamus Nevin said:

‘While the positive performance of manufacturing will come as a relief after months of concern survey anecdotal evidence suggests that the results may, once again, be due to no-deal Brexit contingency planning, stockpiling and declining export demand for UK goods rather than a sign the economic fundamentals are sound.

‘This, along with the increasing global economic slowdown again reinforces why British businesses need certainty on what form of Brexit the country is headed for. Businesses are trying to standstill until the Brexit fog clears but in doing so they are actually going backwards.’

Japanese Yen (JPY) Falls as Machinery Orders Slump

February’s annual machinery orders fell by a lower-than-forecast -5.5%, which did little to aid the Japanese Yen (JPY) against Sterling (GBP).

However, month-on-month orders rose by 1.8%, the first rise in four months.

February’s rise was supported by robust demand in the manufacturing sector.

Overseas demand for Japanese machinery rose by 19% to ¥985 billion, a good sign for the Japanese Yen as this is a good indicator of future exports.

Pound Yen Outlook: Will the GBP/JPY Exchange Rate Rise on a Fresh Wave of Brexit Optimism?

Looking ahead to this evening, the Pound (GBP) could rise against the Japanese Yen (JPY) following the emergency European Council summit.

The European Union is expected to grant Theresa May an extension to Article 50, with reports suggesting this extension could be up to a year.

If the EU leaders grant the Prime Minister an extension, it is likely this will cause the Pound to rise on a fresh wave of Brexit optimism as the UK will avoid crashing out of the union on 12 April.

The Prime Minister is expected to continue cross-party discussions after the summit which could buoy Sterling.

If talks between Labour and the Conservatives prove successful the Pound Japanese Yen (GBP/JPY) exchange rate could rise.

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