Pound to Japanese Yen (GBP/JPY) Exchange Rate Tumbles on Brexit Jitters and Safe Haven Demand
Despite a lack of fresh supportive Japanese data this morning, the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate has failed to recover from yesterday’s losses. Stronger market demand for safe haven currencies like the Japanese Yen (JPY) is keeping pressure on the pair.
While GBP/JPY has tumbled from the week’s opening inter-bank levels of 147.87 and is trending around one Yen lower at the time of writing today, the pair still well up from last week’s levels.
GBP/JPY surged over three Yen last week overall, and on Friday briefly touched its best levels all year. GBP/JPY has still held onto most of last week’s gains due to hopes that a no-deal Brexit will be avoided.
As concerns rise slightly that the UK government’s soft Brexit plan will not succeed, the Pound (GBP) has slipped and this has made it easier for the Yen to sustain a decent recovery.
Pound (GBP) Exchange Rates Tumble due to Profit Taking amid Fresh Brexit Jitters
While hopes have risen in the past week that the UK government will be able to boost the popularity of its Brexit plan enough to help it pass, those hopes slipped slightly yesterday.
If the government makes its Brexit plan amenable enough to pass through Parliament, it will lead to a soft Brexit and a no-deal outcome will be avoided.
As a result, yesterday’s comments from Labour Party Shadow Chancellor, John McDonnell, knocked Sterling (GBP) back. McDonnell said that few Labour MPs would vote in favour of May’s deal, dampening hopes that it could pass next time.
There was also little sign of any breakthrough in fresh negotiations between the UK and EU, fuelling doubts that there will be much more support for the Brexit plan than before.
Investors took profit from the Pound’s recent strength on the back of the latest Brexit news. While Britain’s February services PMIs beat forecasts, they still indicated that the UK economy was near stagnant and this didn’t offer Sterling much relief either.
Japanese Yen (JPY) Exchange Rates Bolstered by Safe Haven Demand
The Japanese Yen (JPY) has been sturdier this week so far, as it found support from both domestic data and global currency movements.
The biggest support for the Yen this week so far has been stronger market demand for safe haven currencies due to fresh uncertainties in major economies.
China announced cuts to its growth forecasts, while the latest Australian growth data came in well short of forecasts.
These factors made investors hesitant to take risks, bolstering demand for currencies widely perceived as safe like the Japanese Yen.
Japan’s latest services PMI also beat expectations this week, climbing from 51.6 to 52.3 rather than the expected 52.1.
Pound to Japanese Yen (GBP/JPY) Exchange Rate Investors Anticipating Japanese Growth Stats
Amid a lack of notable UK data due in the coming sessions, Pound (GBP) investors are anxiously anticipating more Brexit developments.
Sterling could be in for a bout of flat trade if there are no more Brexit developments this week, as investors may be hesitant to move much on the British currency until next Monday’s anticipated meaningful Parliament vote on the government’s Brexit deal.
As a result, Pound to Japanese Yen (GBP/JPY) investors are more likely to turn their attentions towards noteworthy upcoming Japanese data.
Japanese coincident index and leading economic index stats will be published during Thursday’s Asian session, but the data due on Friday could be particularly influential.
Japan’s final Q4 Gross Domestic Product (GDP) growth rate results are expected to show that the economy rebounded slightly at the end of 2018. If these stats beat expectations the Pound to Japanese Yen (GBP/JPY) exchange rate could be in for further losses.