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Pound Japanese Yen (GBP/JPY) Exchange Rate Dips as UK Non-Essential Shops Reopen

April 12, 2021 - Written by John Cameron

GBP/JPY Exchange Rate Falls as UK Markets Remain Cautious

The Pound Japanese Yen (GBP/JPY) exchange rate dipped this morning despite a jump in small business confidence thanks to today’s reopening on the UK’s non-essential shops. The pairing is currently trading around ¥150.25.

As a result, Sterling investors are now more hopeful about the outlook for the UK’s economy, which could begin to make a steady recovery now that non-essential shops return to business.

The Federation of Small Businesses (FSB) Chairman, Mike Cherry, was confident about the easing of some restrictions, saying:

‘It’s fantastic that our shops, hairdressers and gyms can get back to doing what they do best all over England from today, with some restrictions easing in other parts of the UK as well.

‘The certainty provided by the Government’s road map is filling many small business owners with renewed confidence. We live in hope that the virus stays in retreat so the remaining indicative dates for unlocking can be met, enabling our vital night-time economies, offices and travel and tourism businesses to get back to it as well.’

In UK economic news, this evening will see the publication of the latest British Retail Consortium’s (BRC) Retail Sales report for March.

Any improvement in retail sales last month would further buoy confidence in the UK’s economic recovery going forward.

However, GBP investors are remaining cautious after Prime Minister Boris Johnson cautioned people to enjoy the new freedoms but to stay wary of risks.

Japanese Yen (JPY) Rises on Stronger Japanese Machine Tool Orders Data

The Japanese Yen (JPY) rose today following this morning’s publication of the Japanese Machine Tool Orders figure for March. The data revealed that tool orders had increased by 65% last month.

Consequently, JPY investors are more confident about the outlook for Japan’s manufacturing sector.

Today also saw Japan rollout Covid-19 vaccinations for the elderly.

Kyodo News commented:

‘Japan's coronavirus inoculation campaign has been progressing slowly, with over 99 percent of the population yet to receive a shot about two months after its start, trailing many developed nations.

‘Japan, which currently completely depends on imports for its coronavirus vaccine supply, began inoculating about 36 million seniors aged 65 or older on Monday after beginning its campaign with health care workers on Feb. 17. The elderly account for around 29 percent of Japan's population.’

However, with Japan trailing behind the rest of the world in rolling out coronavirus vaccines, Japanese markets are becoming more cautious about the effects this might have on the nation’s economy.

GBP/JPY Exchange Rate Forecast: Could Growing Optimism in the UK Economy Boost Sterling?

Pound (GBP) traders will be awaiting tomorrow’s release of the latest UK Manufacturing and Industrial Production figures for February.

Any further improvement in the outlook for the UK economy, however, would boost the Pound Japanese Yen exchange rate.

Japanese Yen (JPY) investors will be eyeing tomorrow’s release of the latest Japanese Machinery Orders figure for February.

If this points to a steady recovery in Japan’s manufacturing sector, then we could see JPY head higher.

The Pound Japanese Yen (GBP/JPY) exchange rate will continue to be driven by the outlook for the UK economy.

Any signs that easing lockdown restrictions could provide a much-needed boost to Britain’s economy, then Sterling would benefit.
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