Over the past seven days the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate was trending within the range of 186.0962 to 188.7525 with the Yen seeing considerable fluctuations in response to volatile market sentiment. Following last Friday’s dreadful terrorist attacks in Paris, damp market sentiment saw the Japanese Yen advance versus its currency rivals. However, once risk-appetite returned the Yen declined. A -0.8% contraction in Japanese Annualised Gross Domestic Product also weighed on demand for the Yen throughout the week.
The Pound has also experienced considerable fluctuations over the week thanks to mixed results from domestic data. One particularly supportive publication was the UK Core Consumer Price Index which bettered estimates on the year in September. The core inflationary measure is significant as it is one of the factors influencing the Bank of England (BoE) Monetary Policy Committee’s (MPC) timeline for increasing interest rates. However, with the non-core inflation rate remaining in negative territory the MPC will be unlikely to consider hiking rates in the near-term.
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate edged lower by around -0.2% during Thursday’s European session.
On Thursday the Bank of Japan (BOJ) surprised many investors after holding the benchmark interest rate. BOJ Governor Haruhiko Kuroda is holding fast to the view that corporate capital expenditure will pick up. Yen gains following the rate decision were somewhat limited, however, after the central bank offered a cautious view on inflation expectations. This suggests that Kuroda will be prepared to ease policy further in the future should inflation fail to meet with the central bank’s 2% target. The lack of a significant Yen appreciation on Thursday can also be related to demand for high-yielding assets after the People’s Bank of China (PBoC) eased borrowing conditions.
Despite the fact that British data produced disappointing results on Thursday, the Pound held gains versus many of its currency competitors. This is most likely due to speculation that the Bank of England (BoE) will be more inclined to hike the benchmark interest rate within 2016 if the Federal Reserve increases the overnight cash rate in December.
The Pound Sterling to Japanese Yen (GBP/JPY) was trending in the region of 187.9100 during Thursday’s European session.
Looking ahead, the Japanese Yen is likely to see volatility in response to market sentiment with an absence of influential domestic data for the remainder of the week. However, Bank of Japan Governor Kuroda is due to make a speech on Friday which has the potential to provoke changes for the Yen. In terms of British data on Friday, government borrowing figures have the potential to provoke Sterling volatility.
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate was trending within the range of 187.5600 to 188.8100 during Thursday’s European session.