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GBP/JPY Forecast: Pound to Japanese Yen Exchange Rate Edges Higher on UK Retail Sales

May 21, 2021 - Written by John Cameron

The Pound to Japanese Yen (GBP/JPY) exchange rate is edging higher today after the latest retail sales from the UK rose more than expected.

At the time of writing the GBP/JPY exchange rate is trading at around 154.287 as Japanese inflation disappoints.

Pound Sterling (GBP) Exchange Rate Supported by UK Retail Sales Data

The Pound has found support against the Japanese Yen today as the latest retail sales figures from the UK for April surged more than expected.

Retail sales across the UK jumped by 9.2% in April, much faster than expected as much of the high street reopened from coronavirus restrictions.

More so, the latest flash PMI data from the UK for May has shown a sustained growth in the UK’s private sector as the economy recovers from the worst of the pandemic.

Chris Williamson, Chief Business Economist at IHS Markit, commented on the latest PMI’s saying:

‘The UK is enjoying an unprecedented growth spurt as the economy reopens. Factory orders are surging at a record pace as global demand for goods continues to revive, and the service sector is reporting near-record growth as the opening up of the economy allows more businesses to trade.’

‘Business confidence has meanwhile hit an all-time high as concerns about the impact of the pandemic continue to fade.’


Japanese Yen (JPY) Exchange Rate Weakens on Japanese Inflation Data

The Japanese Yen has weakened against the Pound today following the latest inflation data from Japan for April.

Annually inflation fell to -0.4%, the reading was the seventh straight month of a fall in consumer prices, as a resurgence of coronavirus cases capped household spending.

Causing the Japanese Yen to weaken further were the au Jibun Bank Flash Japan PMI’s for May which have shown that the Services Business Activity Index fell from 49.5 in April to 45.7, indicating a sharper contraction in the services sector.

Usamah Bhatti, Economist at IHS Markit, commented on the latest survey results:

‘Flash PMI data indicated that activity at Japanese private sector businesses saw a renewed reduction in May. Output fell at the quickest pace for four months, while the contraction in new business inflows was the fastest since February. Survey members widely attributed the deterioration in business conditions to a resurgence in COVID-19 cases and the reimposition of state of emergency measures.’

GBP/JPY Exchange Rate Forecast: Coronavirus Developments in Focus

Over the weekend, both Pound and Japanese Yen investors will be focusing on any further coronavirus developments.

The Indian variant of the virus continues to cause concern in the UK over fears a surge in cases could derail the UK’s roadmap out of lockdown.

At the same time many Japanese citizens are calling on their government to cancel the 2021 Olympics as coronavirus cases in the country increase.

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