GBP/JPY Exchange Rate Flat as US-China Tensions Hold Back Japanese Yen Gains
The Pound Japanese Yen (GBP/JPY) exchanged rate has steadied today and is currently trading around JP¥137.7882 on the interbank market.
The Japanese Yen (JPY) remained flat against the Pound (GBP) following the publication of the Japanese GDP figures for the first quarter, which increased above forecast to 0.6%.
Mari Iwashita, Chief Market Economist at Daiwa Securities, was downbeat, however, saying that tensions between the US and China were still weighing on the economic outlook:
‘We have yet to see data reflecting the recent heightening of Sino-U.S. tensions. We see high probability of downside risks ahead.’
Any potential gains were clipped by the Japanese trade balance figures for April, which came in lower than expected at -¥982.0bn.
US-China trade tensions continue to weigh on market sentiment in the Japanese Yen as China’s economy faces imminent problems from the recent US tariffs, according to analysts.
Larry Hu, a Chief China Economist at Macquarie Capital, said:
‘The rise [in overall Chinese exports] last month was largely due to front-loading and that’s not sustainable. The downward trend will continue in the coming months.’
GBP/JPY Exchange Rate Rangebound as UK GDP Figures Fall
The Pound (GBP), meanwhile, failed to make any gains on JPY following the printing of the UK GDP figures for April, which showed a -0.4% fall – much worse than expected.
Rob Kent-Smith, from the Office for National Statistics (ONS), commented:
‘GDP growth showed some weakening across the latest three months with the economy shrinking in the month of April, mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.’
Today also saw the UK industrial production figures for March fall by -2.7% on the month, while annual figures also showed a decrease of -1.0%.
These were followed by the UK manufacturing production figures for April, which fell against the 0.2% consensus increased by -3.9%.
This has caused Sterling (GBP) traders to remain cautious, as the economy is showing a potential stall in growth, due to uncertainty surrounding Brexit.
GBP/JPY Outlook: Brexit and US-China Trade Tensions to Remain in Spotlight
Japanese Yen (JPY) traders will be looking ahead to tomorrow’s publication of the preliminary Japanese machine tool orders figures for May, and with any signs of improvement, we could see the JPY/GBP exchange rate rise.
Sterling (GBP) investors, meanwhile, will be looking ahead to tomorrow’s ILO unemployment rate figures for April, which are expected to increase.
These will be followed by the UK average earnings excluding bonus figures for April, which are forecast to hold steady at 3.3%.
The Pound Japanese Yen (GBP/JPY) exchange rate will likely remained subdued, however, with political uncertainty and ongoing US-China trade tensions leaving JPY traders cautious.