Pound Japanese Yen (GBP/JPY) Exchange Rate Muted as PM Forced to Request Article 50 Extension
The Pound Japanese Yen (GBP/JPY) exchange rate remained flat this morning, and the pairing is currently trading at an inter-bank rate of ¥146.6470.
Wednesday evening saw the House of Commons vote by a majority of one to force the Prime Minister to request an extension to the Brexit process.
The draft legislation from Labour’s Yvette Cooper would force Theresa May to ask for an Article 50 extension beyond 12 April.
Sterling gained support on the theory that this move would help to avoid a no-deal Brexit.
However, the Bill still requires both Royal assent and backing from the House of Lords before it becomes law, with doubts raised about whether there would be enough time for this.
Japanese Yen (JPY) Flat as US-China Trade Talks Resume
On Wednesday high level trade negotiations between the United States and China resumed in Washington.
US President Donald Trump is set to meet Chinese Vice Premier Liu He today and hopes are increasingly high that both parties are closer to a deal.
On Wednesday, White House Economic Advisor Larry Kudlow told reporters that China acknowledged for the first time that the US has legitimate gripes about IP theft, cyber hacking and forced technology transfer.
This optimism likely provided the Japanese Yen with an upswing of support, however it could do little to offset Brexit optimism.
Sterling (GBP) Flat as Services Sector Falls into ‘Quicksand’
The UK Markit services PMI slumped to 48.9 in March as business activity declined for the first time in more than two-and-a-half years.
The data found that new orders fell for the third consecutive month, with prices increasing at the slowest pace since June 2017.
Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:
‘With the headline index posting just below 50 for the first time since July 2016 this month’s results are a seriously worrying development.
‘A fight for survival beckons if this market stagnation becomes entrenched, the global economy remains downbeat and the Brexit cloud is not lifted. With business expectations in the sector still close to the weakest seen over the past decade, this inertia will fast become the new normal unless some major change pulls the sector out of the quicksand.’
Japanese Yen (JPY) Muted as Business Confidence Slides to 18-Month Low
The Nikkei Japan Services PMI showed that despite the lower-than-forecast reading of 52, business activity continued to expand.
The index found that the latest data rounded off a relatively solid quarter for the sector, and the increased demand encouraged further job creation.
However, business confidence slumped to an 18-month low.
Commenting on the data, Joe Hayes, Economist at IHS Markit said:
‘When combined with the disappointment from the earlier manufacturing survey, the Composite PMI reading dipped for the fifth straight month and was only indicative of marginal growth. While global trade frictions and a slowdown across the global economy pose obvious external risks, the consumption tax hike later this year could potentially derail the domestic market. Overall business confidence in Japan slipped to its lowest level since July 2016.’
Pound Japanese Yen Outlook: Will the GBP/JPY Exchange Rate Slip on Rising Japanese Consumer Confidence?
The Pound (GBP) could rise against the Japanese Yen (JPY) later in the session as talks between Prime Minister Theresa May and Labour leader Jeremy Corbyn are set to continue.
If there are signs that these cross-party talks are making progress towards ending the Brexit deadlock, the Pound could be provided with an upswing of support.
Looking ahead to Friday, the Japanese Yen could rise following the release of February’s Japanese overall household spending.
If overall spending rises to 2.1% as forecast, it could indicate that consumer optimism is on the rise and the Pound Japanese Yen (GBP/JPY) exchange rate may slip.