February 10, 2020 - Written by John Cameron
STORY LINK Spread of Coronavirus Slows, Sending Pound Japanese Yen (GBP/JPY) Exchange Rate Higher
Pound Sterling Japanese Yen (GBP/JPY) Exchange Rate Edges Higher as Nissan Temporarily Stops Production
The Pound Sterling Japanese Yen (GBP/JPY) exchange rate rose by around 0.3%, leaving the pairing trading at around ¥141.93920.
The safe-haven Japanese Yen fell on Monday after traders remained increasingly upbeat and headed towards riskier assets.
Reports suggested that the spread of the Wuhan coronavirus
could be slowing down, and some large businesses resumed work in China following the extended Lunar New Year break.
Commenting on this, Westpac’s head of FX strategy, Richard Franulovich said:
‘We’ve seen positive headlines about a few large companies all reporting that they were going to be resuming and reopening facilities in China.’
The upswing in risk appetite weighed on the safe-haven Yen, sending the currency lower against an already weaker Sterling.
Meanwhile, the Yen slipped as the Nikkei newspaper reported that Nissan Motor Co will temporarily stop production at its plant in Kyushu due to the virus.
Thanks to the outbreak, the global supply chain remains under pressure as it is increasingly difficult to obtain parts from China.
Pound Sterling (GBP) Makes Gains despite Concerns Over UK-EU Trade Deal
Sterling was able to make gains against the Japanese Yen as there was little data to drive GBP, leaving it to take cues from broader market trends.
The overall trend for the Pound remained downbeat, as GBP exchange rates followed last week’s downward trend.
Commenting on this, MUFG’s currency analyst, Lee Hardman noted:
‘Market participants are becoming more concerned about economic growth outside the U.S., boosting the relative appeal of the Dollar.
‘In the UK, recent data points to a pick up in growth which is good for the Pound but that is being set of by concern over a trade deal.’
Traders were cautious of trade tensions between the UK and European Union after Boris Johnson took a tough stance ahead of trade negotiations.
However, the Pound was able to make gains against the Japanese Yen which remained under pressure as risk appetite continued to fall.
Pound Japanese Yen Outlook: Will GBP Slump on Weak GDP?
Looking ahead to Tuesday, the Pound (GBP) could reverse today’s gains and slump against the Japanese Yen (JPY).
If flash UK Q4 GDP data disappoints and British investment contracts more than expected during Q4 2019, GBP will slump.
However, the pairing could be left flat at the start of Wednesday’s session following Japan's machine tool orders data.
If orders plummet in January, the Pound Japanese Yen (GBP/JPY) exchange rate will be left flat.
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TAGS: Pound Yen Forecasts