Pound Japanese Yen Exchange Rate Steady, Japanese Economic Growth Plunges to Lowest Level Since 2014

GBP/JPY Exchange Rate Rangebound, China’s Coronavirus Outbreak Weighs on Japanese Economy

The Pound Japanese Yen (GBP/JPY) exchange rate held steady this morning, with the pairing currently trading around ¥143.304 after last night saw Japan’s quarter-on-quarter growth report for 2019’s final quarter fall from 0.4% to -1.6%, its worst since 2014.

Taro Saito, the Executive Research Fellow at NLI Research Institute, commented:

‘There’s a pretty good chance the economy will suffer another contraction in January-March. [China’s coronavirus outbreak] will mainly hit [Japan’s] inbound tourism and exports, but could also weigh on domestic consumption quite a lot.’

Japanese Yen (JPY) traders are remaining ever more cautious, however, as they wait to see whether the economy will rebound this year.

However, as the coronavirus epidemic continues to threaten to close down more Chinese factories and limit tourists visiting Japan early this year, the outlook is currently looking dim.

Yasutoshi Nishimura, Japan’s Economy Minister, hinted at further stimulus measures, by saying that the Japanese government would continue to encourage Japanese growth and prevent the coronavirus epidemic from weakening the economy in the near-term.

The JPY/GBP exchange rate is likely to face further volatility this week as Japan’s economic outlook remains uncertain amid growing concerns over the impact on the global economy.

GBP/JPY Exchange Rate Steady, French Minister Warns of UK-EU Trade Talks

The Pound (GBP) has remained steady against many of its peers this morning due to a general lack of UK economic data due out Tuesday

Brexit uncertainty has held back some of the Pound’s potential gains today, however, after French Foreign Minister, Jean-Yves Le Drain, commented that trade talks between the UK and EU will result in ripping each other apart.

Jean-Yves Le Drain commented:

‘I think on trade issues and the mechanism for future relations, which we are going to start on, we are going to rip each other apart.’

‘But that is part of negotiations, everyone will defend their own interests.’

Any further signs that the UK could leave the EU without a trade agreement would prove Pound-negative, as this would effectively throw the British economy into a severe state of uncertainty towards the end of the year.

GBP/JPY Outlook: Could the Japanese Yen Recover on Strong Trade Data?

Sterling traders will be looking ahead to tomorrow’s release of the UK ILO unemployment rate report for December, which is forecast to hold at 3.8%. However, as British unemployment is set to hold at record lows, we could see the GBP/JPY exchange rate edge higher.

Tomorrow will also see the release of the UK average earnings gauge for December. Any further signs of improvement would also prove Pound-positive.

Meanwhile, Japanese Yen (JPY) investors will be awaiting tomorrow’s release of the Japanese machinery orders report along with the imports and export figures for January.

Any signs of improvement in Japan’s trade and manufacturing sector would provide some uplift for the Japanese currency.