Japanese Yen Update: GBP/JPY Exchange Rate Gains on Brexit News, Falling Japanese Retail Sales

GBP/JPY Jumps as Pound Exchange Rates Benefit from Progress in Brexit Bill

The Pound to Japanese Yen (GBP/JPY) exchange rate surged on Tuesday evening as investors became more hopeful that the UK and EU would soon reach an agreement on the Brexit divorce bill.

The Japanese Yen, meanwhile, softened during Wednesday’s Asian session due to underwhelming domestic retail sales stats.

Pound Sterling (GBP) Bolstered by Brexit Bill Hopes

Pound Sterling (GBP) exchange rates surged as investors reacted to reports that the UK and EU were getting closer to agreeing on the price of the UK-EU ‘divorce bill’.

Disagreement over the divorce bill has caused significant delays in Brexit negotiations in recent months and has been one of the main causes of the recent negotiation ‘deadlock’.

Market hopes that talks will accelerate have kept the Pound buoyant recently, and it received an additional boost on Tuesday’s claims that a divorce bill deal was close to being reached.

However, the outlook for Pound Sterling exchange rates is still mixed overall due to economic concerns in Britain and other uncertainties about the Brexit and UK-EU negotiations.

For example, this week it has also emerged that the EU and Ireland are dissatisfied with the UK government’s proposals for the Irish border.

Both Ireland and Northern Ireland wish to keep a soft border, but the UK government has stated that is not possible as the UK, including NI, will be leaving the EU’s single market and customs union.

Japanese Yen (JPY) Suffers After Japan’s Retail Sales Drop

The Japanese Yen (JPY) has been unable to benefit from improved demand for safe-haven currencies in recent sessions as underwhelming Japanese ecostats applied pressure to the currency.

Wednesday’s Asian session saw the publication of October’s Japanese retail sales report, which was forecast to come in at 0.2% month-on-month but instead slowed from 0.8% to a stagnant 0%.

The yearly retail sales print slumped to -0.2% as forecast, though the previous figure was revised slightly higher from 2.2% to 2.3%.

This was the first drop in retail sales in a year. The report noted that bad weather, including typhoons, was keeping consumers indoors and denting retail activity.

Still, despite the drop, economists believe the poor data will be temporary as it was caused by isolated factors.

For now, Japanese Yen investors are awaiting more key data due in the coming days before adjusting their outlooks for the Japanese economy and the currency.

GBP JPY Exchange Rate Forecast: Brexit Developments and Japan Data in Focus

Brexit news is likely to continue driving Pound to Japanese Yen (GBP/JPY) exchange rate movement over the coming days, as an EU-imposed 4th December deadline for the Brexit divorce agreements nears.

If no progress is made on the issue of the Irish border, or the UK and EU cannot reach an agreement on the ‘divorce bill’ after all, the Pound could quickly drop from its recent highs.

However, signs that the UK and EU could reach an agreement by Monday will keep Sterling bolstered.

Japanese Yen (JPY) investors are likely to react to key Japanese data due for publication on Friday.

Friday’s Asian session will see the publication of Japan’s October inflation report, as well as October’s job market data. Monday will follow with November consumer confidence stats.

If these impress investors, the Japanese Yen outlook could improve.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail