Pound Japanese Yen (GBP/JPY) Exchange Rate Muted as Safe-Haven Demand Weakens
The Pound Sterling Japanese Yen (GBP/JPY) exchange rate was left flat today with the pairing currently trading around ¥132.9170.
Today saw the Pound rise against the Japanese Yen to its highest level since the end of July, with easing US-China trade tensions luring investors away from safe-haven currencies.
This morning, the Chinese Ministry of Finance said Beijing will waive tariffs on sixteen types of US consumable and, as a goodwill gesture, increase imports of US agricultural products ahead of the October trade talks.
In a note, MUFG analysts wrote:
‘Yen weakness has been reinforced overnight by speculation that China will implement further measures to ease the negative economic impact of the trade war with the US.’
Sterling (GBP) Left Flat as PM Refuses to Comply With Legislative Bill
Sterling edged up against the Yen as investors speculated on the likelihood of British Prime Minister Boris Johnson reaching a Brexit agreement with the EU.
Reports suggest the government will seek parliamentary approval for an existing agreement before the October deadline.
At the same time, an unyielding Boris Johnson refused to request an extension to Article 50 just hours after the Brexit delay bill became law.
The legislation forces the Prime Minster to request a delay until January 2020 if he fails to secure a withdrawal agreement.
Meanwhile, stronger than expected economic data this week served to calm fears for a third quarter UK recession.
Commenting on this, ING analysts wrote:
‘With the short squeeze in GBP under way, we have observed a general reduction in various GBP risk premia measures over the past week.
‘With the UK Parliament suspended for the next five weeks, GBP may enjoy some more calm today/this week, but we expect pressure on Sterling to return once the early elections are announced.’
Pound Japanese Yen Outlook: Will ECB Rate Cut Push Traders Back to Safe Haven Currencies?
Thursday’s Japanese factory orders could see the Japanese Yen (JPY) rise against the Pound (GBP) if the data prints higher than expected, with positive figures providing an upswing for the Japanese currency.
Meanwhile, investors will be focusing on tomorrow’s European Central Bank (ECB) interest rate decision which is likely to determine market risk-appetite and set the tone for upcoming Bank of Japan (BoJ) and US Federal Reserve meetings.
If the ECB slashes interest rates, it could cause investors to flock to safe-haven currencies like the Japanese Yen.