The Pound Japanese Yen (GBP/JPY) exchange rate had edged higher this morning despite investors’ worries over the UK economic recovery from coronavirus.
At the time of writing the GBP/JPY pairing are trending around the 151.478 level as a strengthening market mood limits the appeal of the Japanese Yen.
Pound (GBP) Limited on UK Economic Recovery Concerns
The Pound has found itself edging higher against the Japanese Yen this morning, however Sterling has been limited on the back of concerns over the UK’s economic recovery from coronavirus
It comes as a survey from the CBI released this morning has shown that business confidence in the UK fell 17% during August.
Charlotte Dendy, CBI Principal Economist, commented on the latest figures and the outlook for UK businesses:
‘It’s clear that the service sector has performed well over the three months to August, revealing strong volumes and profits growth in our latest survey as the economy reopened over the summer. However, the outlook between sub-sectors is set to diverge over the quarter ahead, with a deterioration in prospects expected in consumer services.’
‘Firms in sectors such as hotels, restaurants and travel, do not expect this strength to persist into the next quarter, reflecting the pressure that consumer services firms continue to face.’
Furthermore, car production in the UK soured to its lowest level since 1956 as the sector is plagued by supply-chains issues and the effects of the so-called ‘pingdemic’.
Japanese Yen (JPY) Limited on Upbeat Market Mood
The Japanese Yen has been limited on the back of a more upbeat market mood, as investors become more optimistic surrounding the global economic recovery from coronavirus.
Whilst global coronavirus cases continue to rise, the recent approval from the FDA surrounding the use of the Pfizer vaccine has bolstered recovery hopes.
It comes as Japan battles against its own coronavirus situation and the country extends its state of emergency.
Japan’s Economy Minister Yasutoshi Nishimura commented that:
‘Critical cases have spiked suddenly and the medical system is in an extremely dire state.’
Japan recently suspended the use of 1.6 million doses of the Moderna vaccine over contamination worries.
Pound Japanese Yen Exchange Rate Outlook: Global Market Mood in Focus
An absence of notable economic data from both the UK and Japan will see investors instead keeping an eye on any further domestic and global coronavirus developments.
If Japan’s coronavirus situation worsens or the global market mood strengthens more then JPY exchange rates could suffer.
Any positive domestic developments from the UK could see Sterling push higher into the weekend.