GBP/JPY Exchange Rate Rises on Positive UK PMI Data
The Pound Japanese Yen (GBP/JPY) exchange rate rose today following the publication of the flash UK Services PMI for March, which beat forecasts and emerged from contraction territory at 56.8. The pairing is currently fluctuating around ¥149.25.
Sterling rose against the Japanese Yen thanks to renewed optimism in the UK, with business activity growing at its fastest rate since August last year.
Mike Bell, global market strategist at JP Morgan Asset Management, celebrated the data saying that it reflected growing confidence in the UK economy, saying:
‘Today’s bumper survey results indicate that UK growth should boom as the benefits of the successful vaccine rollout start to shine through into rising economic optimism, new orders and hiring. With huge amounts of pent-up savings and with everyone desperate to return to normality once restrictions are lifted, business optimism in the service sector increased to the highest level since 2004.’
Today also saw the UK’s Consumer Price Index figure for February which fell below forecasts from 0.7% to 0.4%.
However, UK markets are remaining cautious as the European Union (EU) is facing a third-wave of Covid-19. With fears that this could hit the UK in the weeks or months ahead, the Pound has held relatively steady against its peers.
Japanese Yen (JPY) Falls as Outlook for Japanese Economy Dims on Latest PMI Data
The Japanese Yen (JPY) failed to rise today despite the release of the preliminary Japanese Jibun Bank Manufacturing PMI for March, which confirmed consensus and rose to 52.
Jibun Bank commented on the data:
‘Manufacturers remained reluctant to take on additional staff, as job shedding continued for a third consecutive month. Moreover, positive sentiment eased in March, with the level of optimism the softest for nine months.’
As a result, some Japanese Yen investors are remaining cautious as the outlook for the Japanese economy remains largely uncertain, with new economic data showing weakness in the world’s third-largest economy.
Japan’s Cabinet Office commented:
‘The Japanese economy shows weakness in some components [and remains in a] severe situation due to the coronavirus pandemic.’
Pound Japanese Yen Exchange Rate Forecast: Could an Optimistic Bank of England Boost Sterling?
Japanese Yen (JPY) investors will be looking ahead to tomorrow’s speech from the Bank of Japan’s (BoJ) Governor Haruhiko Kuroda.
Any dovishness about the outlook for Japan’s economy would be JPY-negative.
Tomorrow will also see the release of Japan’s latest CPI figure for March.
If this points to a marked downturn in the Japanese economy, then the JPY/GBP exchange rate would suffer.
Pound (GBP) traders will be paying close attention to the Bank of England’s (BoE) Governor, Andrew Bailey, who is due to deliver a speech tomorrow.
The Pound Japanese Yen exchange rate could head higher tomorrow if the BoE is notably upbeat about the outlook for the UK economy.