The Pound to Japanese Yen (GBP JPY) exchange rate hit a new two-week low on Tuesday as strong backing for the government’s Brexit bill caused it to sail thought the first day of debates largely unscathed.
GBP JPY currently sits around 139.30 following the release of the manufacturing figures, down from around 139.44 at the start of the day’s session.
Pound (GBP) Weakened by Brexit Bill
The Pound fell against the Japanese Yen this morning as two of Labours’ planned amendments to the government’s Article 50 legislation were blocked by the House of Commons.
The amendments tabled by labour would have called for Theresa May to make regular updates on the Brexit process and have given devolved governments the right to be consulted on the terms of the UK’s exit from the EU.
However both of these were easily rejected by parliament – being beaten by a majority of around 50 and causing markets to fear that there would be a similar outcome for the slew of other amendments that Labour has planned.
Sterling began to tick higher in the afternoon as the second day of debates got underway as Brexit minister David Jones confirmed that MPs would get a vote on the final terms of the Brexit deal.
However Jones later clarified that this would be a take it or leave it deal, with the rejection of the government’s terms of leaving the EU meaning that there would be no deal at all.
Japanese Yen (JPY) Strengthened by Weakness of US Dollar (USD)
The Japanese Yen continued to be strengthened by a softened US Dollar (USD) today as the unpredictability of Donald Trump leaves the Yen as the only option for investors looking for safe-haven markets.
Trump’s focus on his controversial immigration and border policies has led to markets shying away from the ‘Greenback’ as he is still yet to outline the bold economic plans that prompted the upbeat atmosphere in traders following this election.
This has led the Yen to make solid gains not just against the Pound but most other G10 currencies this week as rising political concerns in Europe simulates demand for safe-haven currencies.
The rise was also supported by Japan’s Coincident Index as it rose from 115.0 to 115.2, beating expectations that it would rise to 115.1.
GBP/JPY Exchange Rate Forecast: Yen to be Weakened by Machinery Orders?
The GBP JPY exchange rate may rally late on Wednesday with the release of Japan’s latest Machinery Orders data as investors expect falling demand will cause orders to plummet from 10.4% to 4.6% in December.
Meanwhile the RICS will release its latest data on UK house prices, with the Pound likely to fall if prices depreciate as expected in January.
Looking further ahead, Sterling sentiment is likely to remain subdued in the led up to the formal start of Brexit negotiations, which Theresa May plans to get underway by the end of March.