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Pound Japanese Yen Exchange Rate Rises as Covid-19 Vaccine Hopes Weigh on JPY

November 10, 2020 - Written by John Cameron

GBP/JPY Exchange Rate Edges Higher Despite Positive Japanese Economic Data

The Pound to Japanese Yen (GBP/JPY) exchange rate rose by 0.7% today owing to positive news about a Covid-19 vaccine. The pairing is currently fluctuating around ¥139.557.

As a result, safe-haven currencies like the Japanese Yen suffered a sell off in favour of risky assets.

With the pharmaceutical company Pfizer announcing a 90% success rate in its coronavirus vaccine trails, risk sentiment has improved significantly.

In Japanese economic news, however, today saw the release of September’s Coincident Index, which showed an unexpected surge in Japan’s economy. The figure beat forecasts and rose from 79.4 to 80.8.

Analysts at Reuters commented on the Japanese economy:

‘Japan’s economy is expected to have rebounded in the third quarter after posting a record postwar contraction in the preceding three-month period, when a nationwide state of emergency over the pandemic paralysed economic activity.’

Meanwhile, Japan’s Prime Minister Yoshihide Suga has instructed his cabinet to compile a stimulus package to revitalise the economy.

As a result, JPY investors are monitoring Japan’s Covid-19 crisis, as this could prevent the nation’s economic recovery in the months ahead.

Pound (GBP) Rises as Covid-19 Vaccine Hopes Buoy Confidence in British Economy

The Pound (GBP) has benefited from news of a possible Covid-19 vaccine, with Sterling investors now more hopeful that the UK economy could recover itself early into next year.

Matt Hancock, the British Health Secretary, also commented today that the UK could see a roll out of Covid-19 vaccines as early as next month.

Mr Hancock commented:

‘We will be working across the NHS with the support of the armed forces seven days a week, over weekends, over bank holidays, to get this rolled out into people’s arms as quickly as possible.’

In UK economic data, today saw the release of September’s ILO Unemployment Rate, which rose by 4.8%.

With the UK’s joblessness rate reaching a four-year high, this has dampened confidence in economy going ahead into Christmas.

Jonathan Athow, the ONS Deputy National Statistician, commented:

‘We might see furlough creep up again and that might mean we don't see any further big increases in redundancies or unemployment, but it's way too early to tell what will happen.’

GBP/JPY Forecast: Covid-19 Vaccine Hopes Could Drag Down the Japanese Yen

Japanese Yen (JPY) investors will be monitoring tomorrow’s publication of Japan’s manufacturing data.

Any improvement in Japan’s economy would prove JPY-positive.

The JPY/GPY exchange rate will remain largely influenced by global risk sentiment. As a result, we could see the Japanese Yen continue to suffer from improved risk sentiment following the Covid-19 vaccine news.

However, Brexit will continue to drive the GBP/JPY exchange rate, with any signs of a possible trade agreement between the UK and the EU being Pound-positive.

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TAGS: Japanese Yen Forecasts Pound Yen Forecasts

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