Pound Japanese Yen (GBP/JPY) Exchange Rate Strengthens as BoJ Remains Dovish

Pound Japanese Yen (GBP/JPY) Exchange Rate Rises amid Dovish BoJ Rhetoric

The Pound Japanese Yen (GBP/JPY) exchange rate is rallying today, as the Bank of Japan (BoJ) reiterates its ultra-loose policy.

At the time of writing, GBP/JPY is trading at roughly ¥166.9930, a rise of around 0.6% from the morning’s opening rates.

Japanese Yen (JPY) Slides as BoJ Nakamura Continues Dovish Rhetoric

The Japanese Yen (JPY) is weakening this morning, following comments made earlier by the Bank of Japan’s (BoJ) Toyoaki Nakamura.

During a speech, Nakamura stated that it was ‘premature’ to tweak the BoJ’s ultra-loose monetary policy. Instead, he reiterated the need to underpin Japan’s struggling economy with substantial stimulus.

Nakamura further stated:

‘Tightening monetary policy at a time when demand continues to remain lower than supply would put huge pressure on corporate and household activity. Recent price rises aren’t accompanied by wage increases yet.’

As such, the BoJ looks likely to keep their very loose approach to tightening for the time being. Nakamura’s comments further reinforce the BoJ Governor Haruhiko Kuroda’s view that interest rate hikes are un-needed in the short term.

The dovish tilt to the BoJ’s monetary policy continues to dissuade investors from anticipating higher rate hikes. Because of this, sentiment has waned towards the Yen so far today.

Pound (GBP) Mixed as Domestic Headlines Impact Investor Sentiment

The Pound (GBP) is mixed this morning, as a lack of impactful data brings domestic headlines to the forebear.

House prices, an indicator of the UK’s economic health, have printed the sharpest drop since October 2008. Halifax reported this morning that prices have fallen 2.3% since the beginning of November, adding to recession fears.

Analysts have explained that the disastrous mini-budget has had a strong impact by sending mortgage rates soaring. Economic headwinds from the cost-of-living crisis have also been pointed to as a reason for falling demand.

Elsewhere, industrial action is beginning to weigh upon businesses throughout the UK. Today, Moonpig – a greeting card company – cut its annual revenue forecast, stating Royal Mail strikes held a significant impact.

As such, the downbeat economic situation in the UK continues to

Pound Japanese Yen (GBP/JPY) Exchange Rate Forecast: Fall in Japanese Trade Surplus to Dent JPY?

Looking ahead for the Japanese Yen, this evening brings the release of October’s current account figures. With a fall from ¥909.3bn to ¥623.4bn predicted, the export focused economy could be showing signs of slowdown. If this prints as forecast, JPY may weaken.

Similarly, with the final Q3 GDP data due to print this evening, the Yen could weaken further if the data shows an increased contraction.

For the Pound, the lack of impactful data continues through to the end of the week. As such, market sentiment towards the UK’s economy may be the core driver of movement. Any further headlines around the UK’s recession and cost-of-living crisis may weaken GBP.

John Mulcahey

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