GBP/JPY Exchange Rate Rangebound as Japanese Industry Activity Eases
The Pound Japanese Yen (GBP/JPY) exchange rate steadied today and is currently trading around ¥138.7750 on the inter-bank market.
The Japanese Yen (JPY) stabilised against the Pound (GBP) following the disappointing Japanese All Industry Activity Index figures for March, which fell below consensus to -0.4%, weighing on market confidence in the Japanese economy.
These were followed by the Japanese national CPI figures which, however, exceeded expectations and improved.
Today also saw the Japanese government downgrade its assessment of the economy, saying that China’s economic struggles – due to ongoing US-China trade tensions – is weighing upon production and exports.
The Japanese Cabinet Office reported:
‘The Japanese economy is recovering at a moderate pace while weakness in exports and industrial production continues.’
GBP/JPY Exchange Rate Steadies as Theresa May Announces Resignation Date
The Pound (GBP), meanwhile, steadied following Prime Minster Theresa May’s announcement that she would resign from the position of Conservative leader as of 7 June, saying it was with ‘regret’ that she had failed to deliver Brexit.
Damian Green, the former first Secretary of State, commented:
‘The fact that parliament has not been able to get a Brexit deal through has led to the impatience, bordering into contempt, for the political class and the amount of hostility and borderline violence is something we have not known for a very very long time.’
However, as Brexit uncertainty is quickly returning on the heels of May’s confirmed resignation, this is beginning to prove a drag on the UK economy.
Today also saw the publication of the UK retail sales figures for April, which eased at 0.0% against March’s 1.2%.
These, however, were followed by the annual retail sales figures for April, which increased at 5.2%.
Samuel Tombs, the Chief UK Economist at Pantheon Macroeconomics, was downbeat however, saying:
‘April’s retail sales figures are a timely reminder that political uncertainty is having no discernible impact on households’ overall spending. The stability of volumes in April is a good result, following recent strong gain.’
GBP/JPY Outlook: Conservative Leadership and Brexit to Remain in Spotlight
Japanese Yen traders will be looking ahead to Monday’s speech by the Bank of Japan’s Governor, Haruhiko Kuroda, and with any further dovishness about the economy, this could weigh on the JPY/GBP exchange rate.
These will be followed by the Japanese leading economic index figures for March, which are expected to hold steady at 96.3.
Monday, however, will be the Spring Bank Holiday in the UK, with Pound traders instead awaiting the inflation report hearings on Tuesday.
The GBP/JPY exchange rate will be dictated by ongoing Brexit developments into next week, and with Theresa May’s confirmed resignation, the next leadership will also occupy investor’s sights.