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Pound Japanese Yen Exchange Rate Edges Higher as Japan’s Machine Tools Orders Fall in January

GBP/JPY Exchange Rate Rises as Coronavirus Fears Compromise Japanese Economy

The Pound Japanese Yen (GBP/JPY) edged higher today, with the pairing currently trading around ¥142.780 after the flash Japanese machine tool orders report for January fell from -33.6% to -35.6%, which left many JPY traders concerned for the overall condition of the Japanese economy.

The Japanese Yen (JPY) is also struggling over China’s coronavirus outbreak, which is weighing on market appetite for JPY as the ongoing epidemic threatens to weaken Japan’s economy.

Paul Cashin, the International Monetary Fund’s Chief for Japan, commented:

‘The spread of coronavirus poses an emerging downside risk to Japan’s economy, although the economic impact will depend on the extent of the spread of the disease and policy responses. If prolonged and widespread, this would likely affect Japan’s tourism and retail activities through a decline in tourist arrivals and spending from China and elsewhere.’

Meanwhile, Japanese Yen investors will be looking ahead to today’s release of January’s PPI report, which is forecast to flatline at 0% month-on-month, while the year-on-year figure is expected to increase from 0.9% to 1.5%.

As a result, we could see the Japanese Yen benefit from positive indicators for the economy in the near-term.

GBP/JPY Exchange Rate Edges Higher In Spite of BoE Public Spending Request

The Pound (GBP) edged higher against the Japanese Yen (JPY) in spite of the Bank of England’s (BoE) Governor Mark Carney’s call for increased public spending to bolster the struggling British economy.

Analysts at Reuters commented:

‘Carney [has] again indicated that such a budgetary stance could reduce the likelihood that the BoE will need to cut rates to support Britain’s economy, despite it showing zero growth in the final quarter of 2019, since when there have been some signs of a pickup.’

Brexit has returned to the headlines today after the European Commission President, Ursula von der Leyen, commented that a UK-EU no-deal was ‘fine’ with the European Union.

Mme. Leyen also added:

‘[T]he UK can decide to settle for less, but I personally believe that we should be way more ambitious.’

With rising fears that the UK could face a no-deal with the European Union later this year, market appetite for the Pound is being compromised due to uncertainty over the UK economy post-Brexit.  

GBP/JPY Outlook: Could Brexit Uncertainty Return to Haunt British Markets?

Japanese Yen (JPY) investors will be looking ahead to Friday’s speech from Masayoshi Amamiya, the Governor at the Bank of Japan (BoJ). Any dovish comments about the Japanese economy, however, would prove detrimental to the JPY/GBP exchange rate.

Brexit developments will continue to drive the GBP/JPY exchange rates this week, with any further signs that the UK could face a no-deal with the EU later on this year limiting the Pound’s gains as the economic outlook dims.