The Pound has been trending in a tight range against the Japanese Yen today, with losses being caused by earnings data in the UK and fears of Japanese growth hitting a plateau.
That being said, the Pound nonetheless saw an overall rise against the Japanese Yen, opening at a rate of 140.33 and closing in the region of 141.61.
Sterling Battered by Earnings Data
Destabilising the Pound today has been the news that UK average earnings growth both with and without bonuses fell to 2.6% in December, despite predictions of no change at 2.8% and 2.7% respectively.
Jobless claims fell dramatically and unemployment remained at 4.8%, although this was not enough to reassure investors in the Pound.
Sticking with the earnings news, although inflation is currently at 1.8% it is expected that consumer price pressures will pick up considerably in 2017, potentially up to 3% by the end of the year.
Concerns of Japanese Slowdown Limit JPY Investor Activity
In the wake of Sunday’s Japanese Q4 GDP showing a quarterly and annual slowdown, fears have been voiced that Japan may have reached economic ‘top speed’, something that has limited Yen demand considerably.
Bloomberg Economics Reporter Yoshiaki Nohara has said of the situation that;
‘The problem is that near-term growth depends on external demand and fiscal stimulus, meaning the upside and growth horizon are limited. Japan also faces the risk that US President Donald Trump’s protectionist rhetoric is soon transformed into policy that disrupts global trade, while the effects of last year’s stimulus are expected to fade by the second quarter of next year’.
Reinforcing these Yen-damaging concerns has been Itochu Corp Economist Atsushi Takeda;
‘Unless domestic private consumption picks up the economy is unlikely to gain traction’.
GBP/JPY Exchange Rate Forecast
For the rest of this week and the week to come, Pound/Japanese Yen exchange rate movement may occur as a result of UK retail sales on Friday, revised UK GDP growth estimates on Wednesday and business investment figures for Q4, also out on Wednesday.
Japanese data to watch out for will include the coming Sunday’s trade balance result for January, along with Tuesday’s industry-wide activity index for December.
UK forecasts have been for retail sales to rise out of negative ranges on the month, but to slow on the year. Next week’s GDP stats are not expected to see any further revision from the first estimates, with reprints of 0.6% on the quarter and 2.2% on the year expected.
Outside of these scheduled releases, February 20
th
will see the Article 50 bill debates resume in the House of Lords, where the bill needed to take the UK out of the EU might face a lot more opposition than was put up in the Commons.