Pound to Japanese Yen Exchange Rate Gains on Hopes of Preventing No-Deal Brexit
A combination of Brexit hopes and weak Japanese machinery data have left the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate higher this week so far. While the pair has been unable to recover last week’s losses, Brexit hopes are keeping Sterling (GBP) buoyed.
Since opening this week at the interbank level of 144.65, GBP/JPY briefly dipped before climbing over a Yen and managing to sustain most of those gains.
While GBP/JPY has been unable to hold enough gains to recover last week’s losses, the pair trended around a Yen and a half above the week’s opening levels this morning and was climbing at the time of writing.
Investors bought the Pound on expectations that UK MPs would vote against a no-deal Brexit, and would subsequently vote to extend the Brexit process tomorrow.
The Japanese Yen (JPY) has been unable to hold its ground amid mixed risk-sentiment and weak Japanese data.
Pound (GBP) Exchange Rates Firm in Anticipation that No-Deal Brexit will be Blocked
Despite the broad fluctuations in the Pound (GBP) yesterday, the British currency was able to sustain at least some of the gains seen on Monday due to market expectations that UK politicians would work to avoid a no-deal Brexit.
Sterling briefly slumped from its weekly highs yesterday, when MPs began to indicate that the latest agreement between the UK and EU was not enough to bolster support for the government’s Brexit deal.
As analysts expected, Parliament voted to block the deal once again during last night’s vote.
However, weakness in the Yen (JPY) prevented GBP/JPY from shedding all of Monday’s gains, and lasting hopes that MPs would vote against no-deal offset some of the concerns about the government being defeated again.
The no-deal Brexit vote will take place in Parliament today is expected to end with Parliament voting against it.
Japanese Yen (JPY) Exchange Rates Mixed on Weak Machinery Data and Risk-Sentiment
Towards the end of last week and at the beginning of this week, a combination of US Dollar (USD) weakness as well as strong market demand for safe haven currencies left the Japanese Yen (JPY) one of the more appealing major currencies.
US-China trade tensions, Reserve Bank of Australia (RBA) interest rate cut bets, and weak US data, all left the Yen more appealing than its rivals as a safe haven currency
However, since yesterday riskier currencies have been rebounding slightly and Japan’s data so far this week has been underwhelming.
While not particularly influential, Japan’s machine tool orders results from February saw a large contraction. January’s machinery orders data, published this morning, also contracted.
Japanese tertiary industry index beat forecasts with a figure of 0.4%, but this was not enough to bolster Yen support.
Pound to Japanese Yen (GBP/JPY) Traders Expect No-Deal Brexit to Be Avoided
The Pound (GBP) remains volatile as investor sentiment over how the Brexit process could unfold changes day-to-day. For now, there may be more gains ahead for the British currency if the votes over the next few days go smoothly.
Analysts predict the upcoming votes will end up with Brexit being delayed. If the EU agrees and Brexit is delayed it will offer the market some relief and bolster hopes that a no-deal Brexit will be avoided.
Brexit news is likely to continue to drive the Pound for the remainder of the week, but Japanese Yen (JPY) investors are looking ahead to Friday’s Bank of Japan (BoJ) policy decision.
As other major central banks have taken a more dovish stance amid a perceived global economic slowdown, the Pound to Japanese Yen (GBP/JPY) exchange rate could be in for further gains if the BoJ is dovish as well.