GBP/JPY Exchange Rate Sinks, Japanese Yen Benefits from Safe-Haven Status
The Pound Japanese Yen (GBP/JPY) exchange rate plummeted by -2% today as the Japanese currency makes gains on its safe-haven appeal. The pairing is currently trading around ¥129.800.
The Japanese Yen (JPY) rose after the Bank of Japan (BoJ) held its interest rates at -0.1%.
The BoJ said in its statement:
‘The BOJ will take additional monetary easing steps as needed without hesitation with a close eye on the impact from the coronavirus epidemic for the time being.’
The Japanese Yen (JPY) gained from its safe-haven status after the US Federal Reserve slashed its interest rates on fears that the Covid-19 outbreak would weaken the world’s largest economy.
Yesterday also saw Japan’s Machinery Orders report for January beat forecasts and rise from -12.5% to 2.9%.
Tom Learmouth, an economist for Japan at Capital Economics, commented:
‘The slight rise in machinery orders in January suggests that business investment was recovering – albeit slowly – before the coronavirus began to dent economic activity from all angles.’
Pound (GBP) Exchange Rate Falls as UK Covid-19 Response Criticised
The Pound (GBP) fell against JPY after the UK Government was heavily criticised for its approach to the nation’s coronavirus epidemic. GBP investors are wary of the currency as the virus is expected to escalate in the UK.
A number of senior doctors and scientists wrote to Downing Street:
‘Our country’s public health response to Covid-19 is demonstrably different to most other countries’ responses globally and in Europe … There is also no clear indication that the UK’s response is being informed by experiences of other countries in containing the spread of Covid-19.’
"The government seems complacent"
Labour leader Jeremy Corbyn says he has written a letter to the prime minister asking why advice on coronavirus "is different to that given in almost every other European country"https://t.co/FzdphI1mdR pic.twitter.com/73NLoYmDKR
— BBC Politics (@BBCPolitics) March 15, 2020
The GBP/JPY exchange rate failed to benefit from today’s Rightmove House Price Index for March. The gauge showed an increase from 0.8% to 1%.
Andrew Burrell, a researcher at Capital Economics, was downbeat:
‘The market will probably grind to a halt, as people won’t be wanting to go out for viewings or have strangers in their home, but because there will be both fewer sellers and fewer buyers, I don’t see any big changes in prices.’
GBP/JPY Forecast: Coronavirus Fears to Weaken Pound
Japanese Yen (JPY) investors will be awaiting Tuesday’s release of January’s Japanese industrial production report. We could see the JPY exchange rate begin to dip if the figure confirms consensus and falls by -2.5%.
Sterling traders will be eyeing tomorrows’ release of January’s ILO unemployment rate. Any signs of improvement could boost the Pound.
The GBP/JPY exchange rate will continue to be driven by developments around the coronavirus. Any further signs of an escalation of the virus in the UK would prove Pound-negative.