May 6, 2021 - Written by John Cameron
STORY LINK Pound Japanese Yen Exchange Rate Steady as Bank of Japan is Optimistic about Japan’s Covid-19 Vaccine Rollout
GBP/JPY Exchange Rate Rangebound as Japanese Economic Optimism Returns
The Pound Japanese Yen (GBP/JPY) held steady today after the Bank of Japan (BoJ) revealed that it was optimistic about Japan’s vaccine rollout. The pairing is currently trading around ¥151.92.
The Japanese Yen failed to gain against the Pound today despite yesterday’s modest but notably more bullish BoJ monetary policy minutes report.
The BoJ minutes said:
‘Some members said while the beginning of vaccine rollouts was a positive sign, developments regarding the pandemic continue to warrant attention.’
However, the Bank also warned:
‘Until effective vaccines become widespread, the spread of COVID-19 may push down private consumption through public health measures and households’ self-restraint behaviour.’
However, Japanese Yen investors are now more hopeful that Japan’s Covid-19 vaccine efforts could help the economy to recover in the months ahead.
Pound (GBP) Exchange Rate Steady as UK Economy is Set for Strongest Growth Since the Second World War
The Pound (GBP) failed to rise against the Japanese Yen today despite the Bank of England (BoE) predicting that the UK is set for its strongest economic growth since World War II.
The BoE’s Governor, Andrew Bailey, said ‘I don’t think we’ve had a bounce back quite of this nature, certainly in modern times’.
Charles Hepworth, the investment director at GAM Investments, explains the BoE’s upgraded growth forecast, saying:
‘They raised the UK growth forecast for this year to 7.25% vs 5% previously, so a big upgrade and reflective of the bounce in real recent data and this means the economy returns to pre-pandemic levels over this year. They still view inflation as only being transiently higher, a now common central bank mantra, but either way the growth outlook following the rapid vaccination roll-out is flying to the upside and this can only build in inflationary pressures over the longer term.’
As a result, GBP investors are now even more optimistic about the outlook for the British economy.
Covid-19 infection rates have remained low and lockdown restrictions are to be eased further later in the month.
UK car sales have also rebounded after ‘one of the darkest years in the automotive industry’, according to the SMMT.
Pound Japanese Yen (GBP/JPY) Exchange Rate Outlook: Could a Rising UK Construction PMI Boost Sterling?
Japanese Yen (JPY) traders will be looking ahead to tomorrow’s release of April’s latest Jibun Bank Services PMI.
Any improvement in the outlook for Japan’s economy would provide a boost for the JPY/GBP exchange rate.
The Pound Japanese Yen exchange rate could head higher tomorrow, however, if the latest UK Construction PMI for April indicates a significant improvement in the nation’s construction sector.
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TAGS: Japanese Yen Forecasts Pound Yen Forecasts