Pound Japanese Yen (GBP/JPY) exchange rate listless despite forecast-smashing UK sales data
The Pound Japanese Yen (GBP/JPY) exchange rate is rangebound this morning, despite better-than-expected UK retail sales data.
At the time of writing, GBP/JPY is trading at around ¥189.1350, showing little movement from the morning’s opening rates.
Pound (GBP) wavers despite forecast-beating sales data
The Pound (GBP) is struggling to attract support this morning, despite forecast-smashing retail sales data.
In January, sales fully rebounded from December’s steep losses, marking an increase of 3.4% on a monthly basis. However, analysis of the data was more muted, as sales remained notably below pre-pandemic levels.
Lisa Hooker, Leader of Industry for Consumer Markets at PwC, commented:
‘While many of the macroeconomic indicators are positive – falling inflation, improving consumer sentiment, the prospect of lower interest rates – consumers remain cautious about spending, particularly in discretionary and big ticket categories, and we do not predict a sustained recovery until the second half of 2024.’
Additionally, investors likely remain cognizant that the UK has entered a recession, preventing further support of GBP.
However, the Pound is being cushioned this morning by a bullish market impulse. As an increasingly risk-sensitive currency, GBP may be catching some bids as investors eye riskier assets.
Japanese Yen (JPY) rudderless despite hawkish BoJ speech
The Japanese Yen (JPY) is trading listlessly this morning, despite hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda.
Ueda stated earlier today that the BoJ will examine its current monetary policy when inflation nears its target. This follows shock news on Thursday that Japan’s economy slipped into a recession in Q4 2023, amid poor consumption.
Governor Ueda stated:
‘I want to confirm the virtuous cycle of wages and prices is strengthening. Based on our economic and price outlook as of now, Japan’s monetary conditions will likely remain accommodative even after ending negative rates.’
While Ueda’s comments suggest a tighter approach on the horizon, the overall policy will likely remain similar.
However, the concern remains that a more restrictive angle could weigh on the Japanese economy. Because of this, the Yen appears unable to capitalise on the hawkish sentiment, as investors remain conscious that Japan has entered a recession.
Pound Japanese Yen exchange rate forecast: Japanese trade data in focus
Looking ahead for the Japanese Yen, the core catalyst of movement could be the latest balance of trade data, due on Tuesday.
The existing surplus is forecast by markets to have fallen in January, down to a deficit of ¥-1925.9 billion. This could weaken the Yen as it may suggest further issues within Japanese exports, which may be grim reading for the wider economy.
For the Pound, meanwhile, next week starts on a quiet note with an absence of data releases. Because of this, Sterling may struggle to find its footing, or trade at the behest of the market mood.
As an increasingly risk-sensitive currency, souring trade could weaken the Pound against safer assets.