Pound Japanese Yen (GBP/JPY) Exchange Rate Near 3-Month-Best despite No-Deal Brexit Fears

GBP JPY Exchange Rate Trending with Upside Bias as Investors Sell Safe Havens

Coronavirus vaccine hopes continue to make investors more willing to take risks, weighing on safe havens and making it easier for the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate to sustain gains.

Since opening this week at the interbank level of 138.57, persisting risk-on movement has left GBP/JPY trending with an upside bias.

Yesterday, GBP/JPY touched on a high of 140.35. This was the best level for the pair since the beginning of September, almost 3 months ago. At the time of writing on Thursday, GBP/JPY trends a little lower at around 139.78.

The Pound (GBP) could climb even higher against the Japanese Yen (JPY) if Brexit optimism improves. If safe havens continue to lose their shine, the Yen may be in for further losses.

Pound (GBP) Exchange Rate Strength Limited by Brexit Jitters despite Strong Services

A stronger than expected UK services PMI is helping the Pound to sustain gains against the falling Japanese Yen today.

Britain’s key November services PMI came in at 47.6 rather than the projected 45.8. This was notably better than initially expected and indicated to markets that Britain’s economy is weathering its second coronavirus lockdown better than feared.

However, while this would typically be good news, it is being overshadowed by fears that UK-EU Brexit negotiations may not end in a deal after all.

Talks are reportedly reaching ‘make-or-break’ phases with less than a month until the end of the transition period. Officials are showing mixed signs of optimism, and huge negotiation differences on fisheries and foreign aid reportedly persist.

Japanese Yen (JPY) Exchange Rates Unappealing as Markets Willing to Take Risks

The Japanese Yen is a currency correlated with safe haven demand. It often strengthens in times of global uncertainty, when investors are looking for safer places to store assets.

As a result of this though, the Japanese Yen has been tumbling as the global outlook improves and investors become more eager to take risks again.

Today’s Japanese services and composite PMIs beat forecasts. However, market risk-sentiment meant that the Yen was unable to benefit from this either.

Today, Bank of Japan (BoJ) monetary policy board member Hitoshi Suzuki said the bank would continue to support Japan’s economy. He said:

‘BOJ’s ETF, REIR buying remain necessary steps but room to enhance the framework’s sustainability, flexibility.

If the pandemic’s impact on the economy is bigger than expected, that could affect financial system stability which in turn will further weigh on the economy.’

Pound Japanese Yen (GBP JPY) Exchange Rate Could Climb Further on Optimistic Brexit News

The Pound to Yen exchange rate is climbing due to Yen weakness this week, but if there are any optimistic Brexit developments the pair could climb even higher.

Investors are anxious that time is running out on Brexit talks. As a result, signs of a deal being met, or fresh optimism from officials, could boost deal hopes and leave the Pound advancing again.

Brexit developments will remain the primary focus for Pound movement, as it has overshadowed this week’s UK data and coronavirus developments.

As for the Japanese Yen, it will remain sensitive to shifts in market sentiment. So long as investors remain more willing to take risks, the safe haven Yen will likely remain unappealing.

A sudden worsening of US political uncertainty or the global coronavirus pandemic could drive investors towards safer havens.

Without a shift in Brexit or risk sentiment though, the Pound to Japanese Yen (GBP JPY) exchange rate is likely to hold ground in the coming sessions.