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Pound Japanese Yen Exchange Rate Dips as Japanese Economic Outlook Improves

GBP/JPY Exchange Rate Falls on Strong Japanese Economic Index Data for April

The Pound Japanese Yen (GBP/JPY) exchange rate dipped today after the flash Japanese leading economic index for April beat forecasts and rose to 103. The pairing is currently fluctuating around ¥154.88.

The Japanese Yen benefited from the leading index figure, which measures the nation’s economic activity, as the figure rose to a seven-year high in April.

Last week also saw forecasters comment that the Japanese economy likely shrank less than was originally estimated in the first quarter.

Saisuke Sakai, an economist at Mizuho Research & Technologies, commented:

‘We expect Japan’s economy to suffer two straight quarters of contraction in April-June as chip supply shortages hurt car output and state of emergency curbs weigh on consumption.’

According Reuters, however, the nation’s economy is expected to shrink by 4.8% in January-March instead of the preliminary reading of 5.1%.

As a result, JPY investors have become more optimistic about the outlook for the world’s third-largest economy.

Pound (GBP) Exchange Rate Dips Despite Strong UK Consumer Confidence Data

The Pound (GBP) failed to rise against the strong Japanese Yen (JPY) today despite UK consumer confidence hitting a five-year high in May.

According to the YouGov consumer confidence gauge, the latest figure rose to its highest level since April 2016.

Darren Yaxley, Director of Reputation Research at YouGov, commented on the data:

‘The growth is yet again driven by confidence in house value as property prices climb to a seven year high, but is also supplemented by huge increases in optimism for job security over the coming twelve months likely due to labour shortages.

‘With not a single metric decreasing this month, business activity for the past 30 days and outlook for household finances over the next 12 months are the only metrics to show little change. Despite this the metrics are still firmly in the positive showing more Britons are feeling confident than not.’

Today also saw the latest Halifax house prices jump by 9.5% last month, with the figure expected to rise higher as the nation’s economy reopens.

However, rising Covid-19 infections in the UK have sparked concerns that the final easing of lockdown measures on 21 June could be delayed.

As a result, GBP investors have become more cautious about the outlook for the nation’s economy.

GBP/JPY Exchange Rate Outlook: Japanese GDP Data in Focus

Pound (GBP) traders will await tomorrow’s release of the latest UK like-for-like retail sales data for May.

Any improvement in the outlook for the UK’s retail sector in the months ahead would be GBP-positive.

The GBP/JPY exchange rate could continue to fall, however, if the 21 June easing of lockdown measures looks like it could be delayed by the Government because of rising Covid-19 infections.

Meanwhile, JPY investors will be awaiting the release of tomorrow’s GDP data for the first quarter.

The Pound Japanese Yen exchange rate would head higher if the outlook for the world’s third-largest economy continues to improve.