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Pound (GBP) Falls Against Japanese Yen (JPY) as UK Construction Demand Shows Little Sign of Recovery

Pound Japanese Yen (GBP/JPY) Exchange Rate Slides as UK Construction Suffers Second Fastest Dall in Decade

The Pound Sterling Japanese Yen (GBP/JPY) exchange rate slumped and the pairing is currently trading at around ¥131.6400.

Sterling fell as data revealed that construction activity declined at the second-fastest pace in over a decade.

The UK construction sector remained stuck in a downturn at the end of Q3, with the PMI sliding from 45 to 43.3 in September.

After construction demand plummeted to the lowest level since March 2009 last month, the latest data showed little sign this was recovering.

Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock noted:

‘The construction sector offered another devastating result in September with the second fastest fall in new orders since March 2009 and the financial crisis. After a relentless six-month decline in order books driven by Brexit uncertainty and political indecision, this is hardly surprising.

‘Residential building continued to be hit hard with a fourth successive month of deterioration but the commercial sector took the biggest brunt of this downturn spiral as clients turned their back on spending and committing to larger projects. This in turn has significant knock-on effects on construction employment with the biggest fall in staging levels since December 2010. Such disappointing news as the sector is still recovering from a lack of skills and capacity created by the last recession.’

Japanese Yen (JPY) Rises despite Weak Consumer Confidence

The Japanese Yen strengthened on Wednesday as investor demand for safe-haven assets increased as weak US manufacturing data saw concerns about the health of the global economy intensify.

Added to this, Brexit pessimism and weak construction data meant the Yen was able to rise against the Pound.

Weak Japanese consumer confidence could do little to stop the Yen edging up against GBP.

September’s consumer confidence plunged to the lowest levels in eight years, from 37.1 in August to 35.6.

The Yen rose as the Cabinet Office revealed that among the four sub-indexes, the index for income growth fell to 38.7 while the index reflecting households’ inclination to buy durable consumer goods sunk to 28.1.

Sterling (GBP) Slumps as PM Seeks ‘Fair and Reasonable’ Brexit Compromise

The Pound slumped as traders continued to grow anxious about the UK suffering a no-deal at the end of the month.

Later on Wednesday, the Prime Minister is expected to set out the details of his ‘final’ offer to the European Union.

In pursuit of a ‘fair and reasonable’ Brexit compromise, Boris Johnson is to address the Tory conference before submitting the new proposals.

However, Sterling remained under pressure as the government continues to insist it will not negotiate a further delay beyond the 31 October deadline.

A senior government official has also insisted that Johnson would not be working on a delay, stating:

‘The government is either going to be negotiating a new deal or working on no deal – nobody will work on delay.’

Pound Japanese Yen Outlook: Will a Dire Services PMI Leave GBP Under Pressure?

Looking ahead to Thursday, the Japanese Yen (JPY) could be left under pressure following the release of Jibun Bank’s PMI composite.

If September’s PMI edges lower than expected, it is likely the Yen will fall against the Pound (GBP).

However, later in the day, the pairing could be left muted following the release of the UK services PMI.

If September’s data shows the services sector is sliding close to stagnation ahead of the UK’s expected departure from the EU, it is likely the Pound Japanese Yen (GBP/JPY) exchange rate will be left flat.