The Pound to Japanese Yen exchange rate has surged to its highest levels since the Sterling flash crash earlier this month, following news that car manufacturer Nissan will be making a major investment in its factory in Sunderland as it commits to building two new car models in Britain.
GBP JPY currently hovers around 128.09 following the Nissan announcement, up from 127.60 earlier this morning.
Pound (GBP) Advances on Nissan Announcement
The Pound (GBP) received a notable boost from the news that Nissan would be building its next Qashqai and X-Trail models at its factory in Sunderland, with it being the first major investment in the British car industry since the UK’s vote for ‘Brexit’.
Business Secretary Greg Clark was upbeat about the news, commenting:
‘The fact Nissan have not only made a long-term commitment to build the next generation Qashqai and X-Trail at Sunderland, but decided to upgrade their factory to a super-plant, manufacturing over 600,000 cars a year, is proof of the strength of the sector.’
Just a few weeks ago the car manufacturer was seeking compensation from the UK government in the event it had to pay tariffs on each car sold in Europe, should Britain no longer be part of the single market after ‘Brexit’.
But with Carlos Ghosn, Nissan chief executive, celebrating Prime Minister Theresa May’s ‘commitment to the automotive industry in Britain’ it is clear that Nissan was granted at least some of the concessions it desired.
The government is yet to detail what it has granted to Nissan but it unlikely to go unnoticed by other carmakers and could potentially cost the UK if they also seek the same ‘support and assurances’.
Japanese Yen (JPY) to dip as CPI stagnates?
Japan will release a slew of domestic data early tomorrow morning with the latest consumer price index being most notable. Unfortunately for the Japanese Yen (JPY) , CPI is forecast to hold at -0.5% for the month of September.
This could drag on the Yen as it causes increased speculation over whether the Bank of Japan will consider implementing further financial easing during its monetary policy meeting next week.
This comes as the currency is also pressured by rising demand for the US Dollar (USD), with market bets on a December rate hike from the Federal Reserve continuing to climb.
GBP/JPY Exchange Rate Forecast: Pound Likely to Slump on House Price Data
The GBP JPY exchange rate could potentially tumble tomorrow with the release of Nationwide’s house price report, which is predicted to fall to 4.9% in October, down from 5.3% the previous month.
Meanwhile, should household spending in Japan rise from -4.6% to 2.7% as predicted then it may allow JPY to offset any potential losses from a disappointing CPI result, while an unexpected increase in the jobless rate could also bolster the Japanese Yen.