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Pessimistic British Consumers Leave Pound Japanese Yen (GBP/JPY) Exchange Rate Flat

Pound Sterling Japanese Yen (GBP/JPY) Exchange Rate Muted as UK Confidence Stuck at Six-Year Low

The Pound Sterling Japanese Yen (GBP/JPY) exchange rate was left muted after disappointing UK confidence, leaving the pairing trading at around ¥141.2460.

The Pound remained flat on Friday as GfK revealed British consumers remained pessimistic thanks to Brexit and election uncertainty.

November’s consumer confidence remained stuck at a six-year low, the joint-lowest level since 2013.

Confidence data remained at -14 and along with other indicators, it paints a rather subdued picture of the UK economy.

Commenting on this morning’s data, Joe Staton, client strategy director at GfK noted:

‘In the face of Brexit and election uncertainty, consumers are clearly in a ‘wait-and-see’ mode.’

Japan’s Industrial Production Suffers Worst Drop in Five-and-a-Half Years

Overnight, data revealed that Japan’s unemployment rate remained at 2.4% in October, unchanged from the previous month. The rate hovered just above a multi-decade low.

Government data showed that the number of people in work reached a fresh record high of 67.87 million, and the highest number of women since data became available in 1953.

However, further data revealed that Japan’s industrial production slumped further than expected in October.

This signals the possibility of further contraction in economic growth, and provides further evidence the government may need to introduce a larger stimulus package.

Thanks to the global economic slowdown, a hike in sales tax and a super typhoon, factory output slumped -4.2%. This matched the worst drop in five-and-a-half years, and slumped twice as much as forecast, weighing on the Japanese Yen.

Commenting on the data, Bloomberg economist, Yuki Masujima stated:

‘Our basic view is that Japan’s growth would slow as a result of weakening external demand pressuring exports. This is playing out, but the trajectory is a little weaker than anticipated. All this adds up to a greater need for fiscal support, given the Bank of Japan’s hands look mostly tied.’

Boris Johnson Election Win to End Brexit Uncertainty?

On Thursday, pollsters, YouGov predicted that current Prime Minister Boris Johnson would secure a comfortable majority in next month’s election.

Johnson is on course to gain a majority of 68, while Jeremy Corbyn’s Labour party is predicted to suffer steep losses.

Sterling rallied as markets hoped a Conservative win on 12th December would end the current Brexit uncertainty that has dragged on for more than three years.

However, traders remained cautious despite the likelihood of a Tory majority rising from 63% to 67.5%, and the probability of a hung parliament falling to 28%.

Pound Japanese Yen Outlook: Weak Japanese Manufacturing to Weigh on JPY?

Looking ahead to the start of next week, the Japanese Yen (JPY) could be left under pressure against the Pound (GBP) following the release of the Jibun Bank manufacturing PMI.

If November’s PMI remains firmly in contraction, the Yen is likely to slide.

Meanwhile, November’s UK manufacturing PMI could cause Sterling sentiment to slide.

If data reveals the UK manufacturing sector falls further into contraction due to ongoing Brexit uncertainty, the Pound Japanese Yen (GBP/JPY) exchange rate will be left muted.