The Pound has made a sizable advance of 0.5% against the Japanese Yen today despite the Spring Budget causing a backlash against the Government for an apparently broken manifesto promise.
Japanese news this week has included machine orders and GDP; mixed results have been seen which have weakened the Yen overall.
Last week saw turbulence for the Pound to Yen exchange rate, although ultimately the Pound rose from its starting rate of 139.24 to 140.18.
Pound Rallies against the Yen as Spring Budget is Scrutinised
Sterling has risen against the Japanese Yen against the odds today, having mainly capitalised on Yen weakness rather than having any especial strength of its own.
The biggest source of influence has been the Spring Budget, delivered by Chancellor Philip Hammond on Wednesday.
Since then, most economists have been focusing on a seemingly minor plan to raise taxes for self-employed persons, which goes against the 2015 Conservative manifesto that brought the party victory in that year’s election.
Other points of contention have included the lack of attention given to Brexit, which seemed an exceptional oversight given that the UK is forecast to start leaving the EU in earnest from March 15
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Elsewhere, the Houses of Parliament have continued to process the Article 50 bill, although it remains to be seen whether amendments that need voting on will still be passed or rejected in time for a mid-March trigger to start Brexit proper.
Japanese Yen Demand Evaporates after Final GDP Shows Disappointing Slowdown
While the Yen has not been unsettled by national budget news this week, it has nonetheless dropped heavily in demand due to the final figures for GDP growth in Q4.
Estimates had been for an annual rise from 1.3% to 1.6%, while the actual figure showed a more disappointing drop to 1.2%.
On the quarter, predictions were for a rise from 0.3% to 0.4%, which again left the actual 0.3% result as a Yen-devaluing outcome.
GBP/JPY Exchange Rate Forecast
For the rest of this week and next, Pound/Japanese Yen exchange rate movement may occur as a result of UK trade balance data on Friday, along with UK jobs data and the Bank of England (BoE) interest rate decision on Wednesday and Thursday next week.
Friday’s trade balance figure might push the Pound down against the Yen if it shows an expansion on the current -3.30bn deficit.
For the BoE decision, no interest rate change from 0.25% is forecast, but policymakers could offer an outlook on the UK economy in a new light if Article 50 has been triggered by the 15
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Incoming Japanese data will include a Q1 manufacturing record along with the Bank of Japan (BoJ) interest rate decision on March 16
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Manufacturing is expected to rise from 7.5 points to 8.4, but any positivity for the Yen may be eroded next week as the BoJ is expected to leave interest rates untouched at -0.1%.