With investors unsettled by Brexit concerns the Pound to Japanese Yen exchange rate experienced a volatile week of trading.
However, the Yen was also under pressure, primarily due to poor industrial data and continued concerns about how to raise national inflation.
Last week, the GBP/JPY rate actually managed to edge slightly higher, climbing from 134.31 to 136.22.
Sterling to Yen Shifts Triggered on Retail Sales and Schauble Remarks
The biggest news of the week for the Pound was limited to the tail end of the week when the UK’s retail sales results for October were shown to have beaten forecasts.
At a time of continued Brexit uncertainty, this outcome raised demand for the Pound considerably, although more reserved investors pointed out the bias added by cold weather and Halloween purchases.
The Pound’s good fortune was ultimately short-lived, given that Friday saw German Finance Minister Wolfgang Schauble trigger a GBP crash. The German official’s comments served to deflate Brexit optimism among some by warning that the UK could still have to pay the EU for many years after it left.
Japanese Yen Slid as PM Abe Met with President-Elect Trump
The Japanese Yen did not have an especially upbeat week, with JPY sliding steadily against most peers.
The week started poorly, with September’s finalised industrial production results getting revised down on both the month and the year.
The rest of the week was fairly limited when it came to Japanese data, though the meeting between Prime Minister Shinzo Abe and Trump in New York was a highlight for Friday.
Abe had earlier called for Japanese wage increases in order to boost inflation, though some expressed scepticism about the viability of this action.
GBP/JPY Exchange Rate Forecast
Next week, Pound Sterling/Japanese Yen exchange rate movement may occur primarily as a result of Wednesday’s UK Autumn Statement, which is expected to dominate economist focus both before and after it arrives.
At the time of writing, it was expected that Chancellor Philip Hammond would be ‘cautious’ and ‘grim’ in his forecasting, given that a long-enough time has passed since the EU Referendum to predict such things.
While the Pound could tumble against the Yen on this news, Hammond is also predicted to promise greater spending in the face of prior budget cuts, which could minimise any negative impacts to some extent.
Outside of this, Friday is set to bring Q3 GDP growth rate second estimates.
From Japan, the big news of the week will be Thursday’s inflation rate figures for October, which are expected to ‘improve’ from -0.5% to -0.1% on the year but fall slightly from 0.2% to 0.1% on the month.