The current week has seen the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate disappoint, with the Yen slowly but surely cementing its lead against the UK currency.
Last week, the Pound made steady downwards movement against the Yen from 176.7444 to a low of 170.2106, although a brief resurgence was seen over Thursday and Friday when the Pound jumped up to 173.1411.
Investors in the Pound were generally discouraged when the UK Manufacturing, Composite and Services PMIs for December declined on previous printings. The Construction PMI for the same period was the only redeeming point, although this was quickly eclipsed by Friday’s Trade Balance data for November, which failed to show the deficit reduction forecast.
The Yen’s strength came chiefly from gathering consumer confidence, although the deteriorating state of the Chinese stock market also served to raise the appeal of the Japanese currency considerably. On the local data front, Wednesday’s Composite and Services PMIs for December declined like the UK’s, although this was only by minimal amounts.
This week has largely been a repeat performance of last week, where despite a few upward spikes from Monday to Thursday, the Pound has nonetheless been in a state of gradual decline, having slid down from 172.1687 to around 169.4884 at the time of writing.
The biggest boost for the Japanese economy this week has come from Tuesday’s Consumer Confidence score for December, which has come out positively with a fractional increase from 42.6 to 42.7. While minimal, this was still a better outcome than the forecast decline.
The Pound has been dealt a crushing blow today with the release of the Bank of England (BoE) Monetary Policy Meeting minutes. While the rate itself remained at 0.50%, policymakers gave no indication that the first long-awaited rate hike would occur anytime soon. According to Ian Kernohan of Royal London Asset Management, an increase is out of the question until the UK Referendum vote takes place, which has not yet been given an official date.
Next week, Pound Sterling/Japanese Yen exchange rate movement may occur as a result of the UK’s annual Rightmove House Prices for January, the Consumer Price Indices for December, the Claims, Earnings and Employment statistics for December and November and the nation’s Retail Sales results.
For Japan, data to be aware of includes the Tertiary Industry Index for November, the All industry Activity Index for the same month and the Nikkei Manufacturing PMI for January.
At the time of writing, no forecasts had been made for the outcomes of these various fields, but the reports most worthy of attention are likely to be the UK’s Employment results for the November period and the Retail Sales stats, along with Japan’s high-impact Manufacturing PMI.
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