Pound to Japanese Yen (GBP/JPY) Exchange Rate Climbs as Investors Sell Safe Haven Currencies
After rising Brexit uncertainties left the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate weaker last week, the pair has been firming this morning ahead of another round of UK Parliament ‘indicative votes’.
Due to mixed demand for the Japanese Yen (JPY) last week, GBP/JPY’s losses were limited. GBP/JPY opened the week at the interbank level of 145.22 and briefly reached over a Yen higher, before ending the week over half a Yen lower.
At the time of writing this morning, GBP/JPY had recovered most of last week’s losses, but Pound (GBP) movement was volatile as investors awaited more developments in Brexit and global risk-sentiment.
Following a surge in demand for the Japanese Yen as a safe haven in the middle of March, the currency was less appealing last week due to recovering strength in its rival the US Dollar (USD).
Pound (GBP) Exchange Rates Volatile as Investors Await Brexit Indicative Votes
Investors remained fairly cautious around the Pound (GBP) this morning, but the British currency still edged higher ahead of Monday’s anticipated Brexit developments – which could be highly influential.
Last week saw Brexit uncertainty deepen further, as the first round of ‘indicative votes’ failed to pave a solid path forward and Prime Minister Theresa May indicated she was willing to step down from her role in order to bolster her deal’s popularity.
The second round of ‘indicative votes’ will be held in Parliament today, but investors are uncertain if this vote will point Brexit in a solid direction either.
For now, the Pound outlook remains full of uncertainties. However, the UK currency did find a little additional support today as Britain’s latest manufacturing PMI data came in with a surprisingly strong figure of 55.1.
According to the report, stockpiling had surged ahead of Brexit, bolstering factory activity. Unfortunately, the report also indicated that there could be weakness at some point in the future, which limited Sterling demand.
Japanese Yen (JPY) Exchange Rates Sold as Investors Sell Safe Havens
Investors were hesitant to buy the safe haven Japanese Yen (JPY) when markets opened this week, as the safe haven demand of the last couple weeks unwound due to some surprisingly strong manufacturing data from China.
China’s March manufacturing PMI from Caixin was forecast to edge higher from 49.9 to 50.1, but instead jumped to a stronger 50.8.
It indicated that China may not have been hit by slowing economic growth as much as feared. As China is a nation that relies heavily on trade, this improved market demand for riskier trade-correlated currencies.
In response, safe haven currencies like the Japanese Yen weakened.
The Yen also found little support in the latest Japanese data, with most of this morning’s ecostats falling short of expectations.
Monday’s Asian session saw the publication of Japan’s latest Tankan manufacturing index, as well as Nikkei’s final March manufacturing PMI.
Most of the major figures fell short of expectations, indicating that Japan’s factory activity was worse than expected and this weighed heavily on the Japanese Yen.
Pound to Japanese Yen (GBP/JPY) Exchange Rate Could Climb Further if Brexit Outlook Softens
Amid a lack of support for the safe haven Japanese Yen (JPY) so far this week, the Pound to Japanese Yen (GBP/JPY) exchange rate may be in for further gains – but only if upcoming Brexit developments give investors anything to be optimistic about.
UK Parliament will hold its second round of ‘indicative votes’ on Brexit later in today’s session, but there is no guarantee that any of the chosen amendments will succeed.
If there is no perceived path forward, no-deal Brexit fears or general election fears could worsen instead with the formal Brexit date still less than two weeks away.
It would leave markets anticipating the possibility of the Brexit process being delayed by as much as a year. This could leave the Pound (GBP) weaker again.
Most of this week’s most influential Japanese data has been published today. Services and household spending stats will come in later in the week.
For now though, investors of the safe haven Yen are more likely to react to market shifts in risk-sentiment and the Pound to Japanese Yen (GBP/JPY) exchange rate outlook will be focused on political news overall.