GBP/JPY Exchange Rate Fluctuates as Leaked Report Warns of Brexit Damage

Damning Brexit Impact Assessment Rocks GBP/JPY Exchange Rate

The Pound to Japanese Yen (GBP/JPY) exchange rate is trading in a wide range this morning following the leaking of government documents assessing the impact of Brexit on the UK economy.

At the time of writing GBP/JPY is trading close to its opening from levels this morning, having recovered from a 0.3% drop following the release of the papers.

Pound (GBP) Volatile as Study Suggests Brexit Will Damage UK Economy

The Pound is on the defensive this morning following the leak of government papers assessing the damage Brexit will have on the UK economy.

The document, titled ‘EU Exit Analysis’ and published by Buzzfeed, includes an analysis of three possible scenarios for Brexit; a full trade deal, single market access and no deal at all.

Crucially the paper suggests that all three outcomes would leave the UK worse off economically, with growth being up to 8% lower over the next 15 years in the event of a worst-case no deal scenario.

The document also looks at the impact on different sectors of the economy, suggesting that areas like food and drink, manufacturing, cars making and retail would feel the brunt of the damage.

While every region is expected to be impacted by the split the report singles out the north-east, the West Midlands and Northern Ireland as being particularly hard-hit.

The leak is another embarrassment for Theresa May and could provide more ammunition for her critics within the Conservative Party as she faces a growing swell of calls to step down.

Rise in Unemployment Weighs on Japanese Yen (JPY)

At the same time the Japanese Yen’s attempts to advance have been hampered somewhat this morning by the release of Japan’s latest employment statistics.

According to data published by the Ministry of Internal Affairs and Communications, the domestic unemployment rate ticked up to 2.8% in December.

This came as a disappointment to markets who had been expecting a figure of 2.7%.

Accompanying spending figures were also downbeat as household spending nosedived from 2.1% to -2.5% in December, falling well below expectations of a more modest decline to -0.6%.

GBP/JPY Exchange Rate Forecast: UK Consumer Confidence to Remain Insipid

Looking ahead the GBP/JPY exchange rate may find itself tumbling in overnight trade as Gfk publishes the UK’s latest household sentiment figures.

Economists predict the Consumer Confidence index will have held at a four-year low of -13 in January as pressures on household finances continue to be a source of concern for many families.

Meanwhile the Yen may advance tonight with the release of Japan’s latest industrial production figures, with analysts predicting that factory output will have jumped from 0.5% to 1.6% last month.

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