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Pound Japanese Yen (GBP/JPY) Exchange Rate Steadies as Japanese Industry Activity Falls Below Expectation

April 24, 2019 - Written by John Cameron

GBP/JPY Exchange Rate Flat as Japanese Economic Index Rises

The Pound Japanese Yen (GBP/JPY) exchange rate held steady today and is currently trading around ¥144.7780.

The Japanese Yen (JPY) failed to make any gains against the Pound (GBP) following the publication of the Japanese All Industry Activity Index figures for February, which fell below expectation by -0.2%.

These were followed by the printing of the Japanese Leading Economic Index for February, which rose to 97.1 – although falling below the forecast 97.4.

Many Japanese Yen traders however are bracing for tomorrow’s interest rate decision from the Bank of Japan (BoJ), which is expected to remain at -0.1%

Hiroshi Wantanabe, a former Currency Chief at Japan’s Ministry of Finance, has commented that the BoJ is likely to keep its current policy, reassuring some Japanese Yen traders that the bank is unlikely to announce any additional easing.

The Pound, meanwhile, has steadied against the Japanese Yen following the publication of the UK public sector net borrowing figures for March, which came in at £0.840bn – a 17-year low.

Andrew Wishart, an economist at Capital Economics, commented:

‘The big picture, though, is that borrowing is now low enough for whoever is in office to set fiscal policy according to economic or political aims as opposed to the overriding objective of reducing the deficit.’

GBP/JPY Exchange Rate Steadies as Conservatives Fail to Compromise on Brexit

In Brexit news meanwhile, labour Leader Jeremy Corbyn has criticised the Conservative party for not comprising on certain crucial aspects of the withdrawal deal, which indicates that cross-party talks are failing to providing any consensus for the UK’s leaving of the European Union.

Mr Corbyn said:

‘We cannot go on hearing this tired old mantra that the Brexit agreement has to be adhered to. We will see how it goes, but the government does really need to move on with it.’

This has prevented Sterling from making any gains against many of its competitors today, as investors are remaining cautious as a political consensus on Brexit is failing to emerge.

Meanwhile, Prime Minister Theresa May is coming under increasing pressure from MPs for her resignation.

News that the former Conservative MP Ann Widdecombe would return to politics to back the newly-formed Brexit party has also caused reason for concern, indicating division within the major party which could affect an emerging Brexit consensus.

GBP/JPY Forecast: Sterling Could Fall on Cross-Party Breakdown

Japanese Yen traders will be looking ahead to the interest rate decision tomorrow.

However, with any sudden changes to its policy in the policy statement tomorrow – particularly towards a more dovish turn – this could see the Japanese Yen weaken against Sterling.

Tomorrow will also see the printing of the Japanese Foreign Investment in Japan Stocks figures for April.

Pound investors will be once again focusing on Brexit developments this week, and if the cross-party talks show continuing signs of breaking down, this could see the GBP/JPY exchange rate fall.

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