25% Chance UK Could be Falling into a Recession Leaves Pound Japanese Yen (GBP/JPY) Exchange Rate Muted
The Pound Sterling Japanese Yen (GBP/JPY) exchange rate is currently trading at an inter-bank rate of ¥134.4900, unchanged from the days opening levels.
Sterling sentiment was left dampened as the National Institute for Economic and Social Research (NIESR) stated there is a significant threat of UK recession in the next year.
Director of NIESR, Professor Jagjit Chadha said:
‘However we look at it, there will not be much economic joy in a no-deal Brexit.’
He also warned that a no-deal could ‘throw concrete’ into the wheels of the UK economy, and cause GDP to slide by 5% in the long run.
Cabinet Ministers Resign in Protest Against Frontrunner Boris Johnson
Meanwhile, a third Conservative MP has come out in protest against Boris Johnson’s potential win in the Tory leadership race.
Sir Alan Duncan, Foreign Office Minister, resigned on Monday while Chancellor Philip Hammond and Justice Secretary David Guake have both said they would resign if Johnson takes office.
In his resignation letter to Prime Minister Theresa May he stated it was ‘tragic’ that her government has been dominated by ‘the dark cloud of Brexit’.
Meanwhile, Chancellor Philip Hammond stated over the weekend that he would quit as a no-deal Brexit was ‘not something I could ever sign up to.’
He also added:
‘It’s very important that a Prime Minister is able to have a Chancellor that is closely aligned with him in terms of policy.’
Japanese Yen (JPY) Exchange Rate Muted despite Falling Risk-Appetite
Meanwhile, despite a decrease in risk-appetite the safe-haven Japanese Yen (JPY) was left muted against Sterling (GBP) on Monday.
On Friday tensions heightened as footage revealed the Iranian military defied a British Navy vessel when it took control of a tanker in the Strait of Hormuz.
The Stena Impero was taken after Iran stated the vessel was ‘violating international maritime rules.’
However, higher-risk currencies continue to derive support from the odds of a near-term Federal Reserve interest rate cut.
Pound Japanese Yen (GBP/JPY) Exchange Rate Outlook: Will a Dovish BoJ Weigh on JPY?
Looking ahead to this afternoon, the Japanese Yen (JPY) could slide against the Pound (GBP) following a speech from Bank of Japan (BoJ) Goveror Haruhiko Kuroda.
Japanese Yen sentiment could be left dampened if Kuroda’s tone is overly dovish and suggests the bank may cut rates.