Pound to Japanese Yen (GBP/JPY) Exchange Rate Dips as UK-EU Brexit Deal is ‘Very Difficult’ says Downing Street

GBP/JPY Exchange Rate as No-Deal Brexit Fears Drag Down Sterling

The Pound to Japanese Yen (GBP/JPY) exchange rate dipped today, with the pairing currently trading around ¥138.770.

Sterling fell today after Prime Minister Boris Johnson warned that securing a post-Brexit trade agreement with the European Union (EU) was still ‘looking very, very difficult’.

Nonetheless, Mr Johnson appears determined to secure an agreement ahead of January 1st, 2021, when the UK is officially due to leave the EU with or without a deal.

Mr Johnson commented:

‘You’ve got to be optimistic, you’ve got to believe there’s the power of sweet reason to get this thing over the line.’

‘We’ll do our level best, but I would just say to everybody – be in good cheer, there are great options ahead for our country on any view. But the key thing is, on 1 January, whatever happens there’s going to be change and people need to get ready for that change.’

A market analyst at IG also said that British markets remain ‘jumpy going into tonight’s trade as market participants await a definitive answer’ on a post-Brexit trade deal.

As a result, demand for Sterling has fallen on rising fears of a no-deal Brexit at the end of the year.

Japanese Yen (JPY) Rises as Japan Announces Covid-19 Economic Stimulus Measures

The Japanese Yen (JPY) rose today after Japan announced new Covid-19 stimulus measures to bolster the Japanese economy.

Japan’s Prime Minister Yoshihide Suga commented:

‘We have compiled these measures to maintain employment, sustain business and restore the economy and open a way to achieve new growth in green and digital areas, so as to protect people’s lives and livelihoods.’

Consequently, JPY investors have become more optimistic about the nation’s economy going forward.

Meanwhile, hopes of a Covid-19 vaccine rollout have improved the outlook for both the domestic and global economy in the near-term.

In Japanese economic data, today saw the release of the Eco Watchers Survey for the Economic Outlook for November, which slumped from 49.1 to 36.5.

As a result, some JPY investors are remaining cautious as the outlook for the Japanese economy, despite a Covid-19 vaccine, are looking increasingly uncertain.

GBP/JPY Outlook: Could an Improving Outlook for Japan’s Manufacturing Sector Boost the Japanese Yen?

Japanese Yen (JPY) investors will be awaiting tomorrow’s release of the Japanese Machine Tool Orders for November.

Any improvement in the Japanese manufacturing sector would be JPY-positive.

The GBP/JPY exchange rate will likely remain subdued if Brexit developments continue to disappoint.

Any further signs of a possible no-deal between the UK and the EU would drag down Sterling.

David Moore

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