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Pound Japanese Yen Exchange Rate Struggles as JPY Benefits from Softer Rival Outlooks

Japanese Yen Currency Forecast

Pound Japanese Yen Exchange Rate Lacks Drive as Investors Hesitant to Buy Sterling 

Since the Pound’s (GBP) plummet last week, investors have been hesitant to buy the Pound Japanese Yen (GBP/JPY) exchange rate. Sterling’s outlook remains strong, but there are a lack of fresh upside surprises in UK news this week. 

Last week saw significant losses for GBP/JPY last week. GBP/JPY briefly touched on a 3-year-peak of 153.36, before plummeting and closing around 3 Yen lower at the level of 150.31. 

Since markets opened this week, GBP/JPY has struggled to mount any recovery either. Yen (JPY) demand has risen due to weakness in its biggest rival, the US Dollar (USD). 

At the time of writing on Thursday, GBP/JPY is trending in the region of 149.77. 

Pound (GBP) Exchange Rates Weighed by Brexit Concerns, Lack of Fresh Drive 

Investors have been hesitant to buy the Pound too much this week. Sterling’s movement has calmed since last week’s sharp selloff, but there are a lack of fresh upside developments. 

With much of the recent good news already priced into Sterling, markets simply don’t have much reason to keep buying the Pound. 

On top of this, fresh uncertainties about Britain’s relations with Ireland have been weighing slightly on the Pound. Trade between the UK and the Republic of Ireland, which had strong trade links pre-Brexit, have slumped this year. 

Japanese Yen (JPY) Exchange Rates Remain Strong despite Japan’s Gloomy Economic Outlook 

Demand for the Japanese Yen has been stronger this week, as investors buy it over its less appealing rivals. 

The Yen’s biggest rival, the US Dollar, has been far weaker over the past week or so. As the Yen is also a safe haven currency, investors avoiding risks currently prefer the Yen to the US Dollar. 

This is despite Japan’s own economic outlook being relatively gloomy. Today saw the publication of the Bank of Japan’s (BoJ) latest quarterly report, and two of Japan’s nine regions had their economic forecasts downgraded. 

According to the BoJ report: 

‘A resurgence of coronavirus infections weighs on service consumption. 

The BOJ maintained its assessment for the remaining seven areas. 

Japan’s regional economies picking up as a trend or showing signs of a pick-up.’ 

Pound Japanese Yen (GBP/JPY) Exchange Rate Awaits Next Week’s Data 

Amid a lack of major UK or Japanese data due for publication tomorrow, the Pound and Japanese Yen are likely to be driven by shifts in market sentiment for the remainder of the week. 

If the US Dollar suddenly sees a surge in demand for example, this could drag the Yen lower and make it easier for GBP/JPY to advance. 

Failing that though, investors have little reason to buy the Pound and the Pound to Yen exchange rate will likely remain pressured. For now, Pound investors are awaiting key UK data and potential developments in Britain’s coronavirus situation. 

Many key UK ecostats are due for publication throughout next week. This includes job market, inflation, retail sales and PMI stats. 

Key Japanese data including trade, production and inflation figures will also be published. 

Overall, unless markets find new reason to buy the Pound or US Dollar, the Pound Japanese Yen (GBP/JPY) exchange rate is unlikely to see another surge in demand just yet.