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GBP/JPY Exchange Rate Dips Following BoE’s Unchanged Interest Rate

Two pound coin.

The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is currently trending in the region of 171.1200, experiencing a low of 170.6300 and a high of 171.8700. Movement at this time is around -0.44% which is likely to be a result of yesterday’s Bank of England (BoE) decision to maintain their interest rate.

A bout of risk aversion also helped to bolster the safe-haven Yen.

After the Bank of England’s decision to maintain the low interest rate of 0.50% yesterday, the market was relatively unmoved towards the Sterling. This has meant sentiment towards the Pound is still negative following Wednesday’s poor industrial and manufacturing production reports.

Yesterday the Yen, as a traditional safe-haven currency, traded much higher than many other currencies as investors ditched riskier assets in the wake of ongoing geopolitical unrest.

The situation in Russia notwithstanding, international unease was dramatically heightened after US President Barack Obama said he would authorise airstrikes in Northern Iraq.

As a result the ‘Greenback’ (USD) dipped against the Yen despite showing positive growth against most of the majors.

Today has seen some important data released to gauge the current economic situation in the UK. Year-on-year Construction Output was forecast to rise from the previous figure of 3.5% to 4.75%.

Those backing the Pound will be bolstered at the actual data which showed a 0.6% rise on the forecast figure to 5.3%.

However, Total Trade Balance was forecast at -£2050, down from -£2418 posted in May.

The actual result was disappointing having risen from the estimate to -£2459.

The Trade Balance, being one of the biggest components of the United Kingdom’s Balance of Payment, has a significant impact on the Pound’s performance. Also Visible Trade Balance posted an unwanted gain from the forecast figure of -£8900 to -£9413.

Pound Sterling to Japanese Yen exchange rate trending around 171.0500

The Bank of Japan’s (BoJ) Monetary Base Target was posted earlier this morning. It was forecast to remain at 270 trillion and the result remained faithful to the prediction.

The Economy Watchers Survey asks business-cycle sensitive workers their thoughts on existing and future economic conditions, giving a detailed picture of Japanese economic trends. Forecast at 48.5 from the previous posting of 47.7, the actual data was revealed to jump to 51.3.

Next week will see some important data released for both currencies.

The Japanese Tertiary Industry Index is one to watch as it evaluates the monthly change in output produced by Japan’s service sector.

More important for Japan’s economic standing will be Wednesday’s data release of Gross Domestic Product (GDP). GDP serves as one of the primary measures of overall economic well-being. It is forecast to drop to -1.8% from a previous figure of 1.6%.

Wednesday of next week is also important from a UK economic perspective. Jobless Claims and Unemployment Rate will both have a significant impact on the Pound to Japanese Yen (GBP/JPY) exchange rate.