Pound Japanese Yen Exchange Rate Tumbles from Six-Year High

Pound Japanese Yen Exchange Rate Plummets from Multi-Year High

The Pound Japanese Yen (GBP/JPY) exchange rate is falling sharply this morning, the pairing relinquishing the majority of yesterday’s losses.

At the time of writing the GBP/JPY exchange rate is trading at around ¥167.2550, down roughly 0.8% from this morning’s opening levels.

Japanese Yen (JPY) Rebounds Following Market Correction

The Japanese Yen (JPY) is surging this morning. As the currency benefits from a market correction after plunging to multi-year lows earlier in the week.

The Yen struck a six-year low against the Pound and a 20-year low against the US Dollar on Wednesday.

The plunge came after Bank of Japan (BoJ) Governor Haruhiko Kuroda reiterated the bank’s forex stance. Telling parliament, a weak Yen ‘is a plus to the economy’.

This further underpinned the BoJ’s reluctance to follow other central banks in tightening monetary policy. An expected rate hike from the European Central Bank (ECB) next month will leave the BoJ as the only major central bank welded to its ultra-loose monetary policy.

Further underpinning the Yen this morning is a broad weakening of risk appetite. Investors remain cautious amid ongoing global recession fears.

Pound (GBP) Dented by UK Growth Warning

The Pound (GBP) is on the defensive this morning, following fresh warnings over UK economic growth.

Hot on the heels of the OCED’s growth warning on Wednesday. The British Chambers of Commerce (BCC) has predicted UK growth will ‘grind to a halt’ this year.

The BCC forecasts elevated inflation will suppress consumer spending in the coming months. Which alongside a forecast drop in business investment is expected to see annual growth slow to 3.5%.

Alex Veitch, director of policy at the BCC, said:

‘Our latest forecast indicates that the headwinds facing the UK economy show little sign of reducing with continued inflationary pressures and sluggish growth.

‘With inflation forecast to race ahead of wages, we are concerned about a dip in consumer spending which would further impact businesses and hamper growth. We forecast that if trends continue, inflation will only return to the Bank of England’s target rate at the end of 2024.’

Meanwhile, the Pound is also being pressured by ongoing UK political jitters. GBP investors remain sceptical Boris Johnson will be able to serve out his full term as PM.

Pound Japanese Yen Exchange Rate Forecast: GBP/JPY to Remain Sensitive to Risk Appetite?

In the absence of any notable data, the Pound Japanese Yen exchange rate may continue to be driven by risk appetite through the end of this week’s session.

This could see the Yen extend its recovery, assuming a cautious mood continues to prevail.

Sterling, meanwhile, could face headwinds because of ongoing political uncertainty. Renewed Brexit risks are likely to weigh on the Pound. GBP investors fear the PM will renew his push to unilaterally alter the Northern Ireland protocol amidst to win back the support of his MPs.

Matthew Andrews

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