GBP JPY got off to a poor start to the week, but the UK currency has since managed to stabilise slightly.
The Yen’s performance over the last few days has been less-than-impressive, with progressive losses being recorded against major peers such as the Euro and US Dollar.
Before the latest Brexit news sparked a broadbased GBP downtrend, the Pound had actually been advancing on the Japanese Yen, with the currency climbing from 129.83 to 132.40 before the weekend.
Pound Sterling News: Outlook Uncertain for GBP after Dramatic Dive and IMF Forecast
The Pound has had a dramatic start to the week, having dived on the back of an announcement from Prime Minister Theresa May about Article 50.
The news concerned the date for triggering the Article, which will officially begin the UK’s exit from the EU. May stated that the act would take place in Q1 2017, meaning it will be activated by the end of March.
While not exactly ‘new’ news, the official source resulted in investors quickly panicking and abandoning the Pound due to the time limit now placed on the UK’s place within the EU.
Elsewhere, UK manufacturing and construction PMIs printed positively, which to a small extent reduced the losses seen by the Pound during trading.
The latest development for the UK came from the International Monetary Fund (IMF), which stated that while the UK would grow quickly over the remainder of 2016, it is also set to see growth slow considerably in 2017.
Japanese Yen Update: Negative Interest Rates Here to Stay, According to BoJ Head
The value of the Yen over Monday and Tuesday has been generally poor when compared to most of its regular peers, with the advance against the Pound primarily occurring as a result of GBP fluctuations.
Japanese data has seen the September Nikkei manufacturing PMI rise to growth from 49.5 to 50.4, while consumer confidence on the same month has also climbed from 42 points to 43.
Less beneficially for the Yen’s appeal have been statements from Bank of Japan Governor Haruhiko Kuroda, who has said that he sees no direct damage to Japanese banks due to negative national interest rates.
A controversial decision in itself, Kuroda’s words suggest that negative interest rates aren’t likely to change in the future, which has brought concerned investors.
GBP/JPY Exchange Rate Forecast
Looking ahead, notable Pound Sterling/Japanese Yen exchange rate movement may come over Wednesday on the UK’s and Japan’s September services PMIs, as well as on Friday when the UK trade balance for August is announced.
In the former case, the UK services PMI, a key sector when it comes to economic growth, is expected to dip while remaining in the plus-50 growth range, while Japan’s services result has a rise from 49.6 to 49.8 on the cards.
In the latter case, this result will be an improvement, although still a sign that the sector is in a state of contraction.
Closing off the week, the UK trade balance is forecast to show a deficit reduction from -4.5bn to -3.1bn.