Pound Japanese Yen Exchange Rate Struggles to Advance as Safe Havens Buoyed

Pound Japanese Yen Exchange Rate Jittery as Sterling Lacks Drive

Investors had little reason to buy the Pound Japanese Yen (GBP/JPY) exchange rate today. The Pound (GBP) outlook is limited due to Britain’s coronavirus situation, and while the Japanese Yen (JPY) was supported by safe haven demand its appeal is limited.

Last week’s market sentiment and UK vaccine hopes helped GBP/JPY to bounce from the interbank level of 141.00 to 142.00 throughout the week – a jump of around a Yen.

Since markets opened this morning, GBP/JPY has attempted to advance. However, safe haven demand has cut advances short.

While GBP/JPY touched on an 11-month-best of 142.30 earlier, the pair is trending closer to the week’s opening levels at the time of writing.

Pound (GBP) Exchange Rates Limited amid Britain’s Mixed Coronavirus Outlook

The Pound climbed for most of last week, but today has been seeing more mixed movement.

While there has been good news for the Pound lately, such as ramped up coronavirus vaccine plans, some analysts believe the good news is already priced into Sterling’s strength.

As a result, news that Britain continues to improve its vaccine schemes has not been enough to boost the Pound much further today.

While there is speculation that there could be some UK lockdown easing next month, the UK government has been hesitant to set anything in stone. The government has also indicated that restrictions could remain in place for quite some time.

Japanese Yen (JPY) Exchange Rates Limited despite Safe Haven Demand

At the beginning of the week, concerns about the global coronavirus outlook left markets anxious. As a result, demand for safe havens, more appealing in times of uncertainty, rose.

This has kept the Japanese Yen buoyant today. GBP/JPY is struggling to sustain more gains as the Yen’s safe haven appeal keeps it from falling.

Still, GBP/JPY has been able to avoid losses as well. Investors are hesitant to buy the Yen too much, as Japan’s economic outlook is still fairly gloomy as well. Japan’s state of emergency is keeping economic activity limited.

Bank of Japan (BoJ) Governor Haruhiko Kuroda said today that the economy could recover to pre-pandemic levels by March 2022 however. Speaking at the World Economic Forum (WEF), he said:

‘Both fiscal and monetary policies have been successful in preventing corporate failures and unemployment,

We expect, probably by the end of fiscal 2021 or early fiscal 2022, that Japan’s economy would recover and come back to levels before the pandemic started,’

Pound Japanese Yen (GBP/JPY) Exchange Rate Could Rise if UK Job Market Data Impresses

While the Pound to Japanese Yen exchange rate’s movement is mixed today, the pair could see a shift in direction depending on major data due in the coming sessions.

Tomorrow will see the publication of this week’s most influential UK stats. Britain’s job market results from November are due, and if they beat expectations they could boost hopes that Britain’s economic activity is resilient to the coronavirus pandemic.

This could make GBP/JPY gains in the coming days easier, especially if investors becoming more willing to take risks again.

The safe haven Japanese Yen could weaken if global market optimism rises and investors head for riskier assets.

Upcoming Japanese data could be influential as well. Wednesday will see the publication of Japanese retail sales data, followed by unemployment rate stats on Thursday.

Of course, developments in Britain and Japan’s domestic coronavirus situations will continue to drive the Pound Japanese Yen (GBP/JPY) exchange rate as well.

Josh Jeffery

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