The Pound has made some dramatic movement against the Japanese Yen this week, with Sterling currently being in a solid state of decline against the rallying JPY.
The fortunes of Japan’s currency have been on the ascendant recently, thanks to an extremely positive reaction to the latest Bank of Japan (BoJ) report and to further developments regarding the nation’s energy infrastructure.
The Pound Sterling to Japanese Yen exchange rate peaked around 157.4189 this week before sliding to a low of 153.8960.
GBP Movement Dictated by Escalating ‘Brexit’ Consequences
The most recent source Pound volatility has been the EU Referendum, which has only been growing in intensity and ferocity as the June 23
rd
vote date approaches.
The latest news has been nothing if not alarming; the National Institute of Economic and Social Research (NIESR) has estimated that many low-income households could lose around £5500 in benefits and relief measures if the UK leaves the EU, while a staggering drop in the Royal Institute of Chartered Surveyors (RICS) house price balance from 39% to 19% has also been attributed to ‘Brexit’ worries.
In terms of domestic data, the Pound has actually been granted a boon in the form of the trade deficit for April, which has shown a reduction in all three fields, although this has done little to undo the variety of losses experienced by the Pound today.
Japanese Yen Soars as BoJ’s Nakaso Praises Negative Interest Rates
The appeal of the Yen has gone through the roof lately, thanks to the latest announcements from Japan’s central bank.
Although the BoJ’s decision to introduce negative interest rates was extremely controversial, BoJ official Hiroshi Nakaso has stated that ‘the positive effects (of negative rates) are big’.
Another piece of good news for the Japanese economy has been the speculation that due to a massive governmental investment in solar energy since 2011, energy costs may actually fall in the summer.
More direct data out of Japan has been less supportive, with recent machine and machine tool orders in April and May falling considerably.
GBP/JPY Exchange Rate Forecast
For the remainder of the current week and the week to come, Pound Sterling/Japanese Yen exchange rate movement may occur as a result of tomorrow’s UK construction output data and the coming Thursday’s Bank of England (BoE) and BoJ interest rate decisions.
UK construction is forecast to rise on the month but fall on the year for April, while both the BoE and BoJ are expected to respectively freeze their interest rates at 0.5% and -0.1%.
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