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Pound Japanese Yen (GBP/JPY) Exchange Rate Flat as Japanese Inflation Figures Fall to Two-Year Low

GBP/JPY Exchange Rate Steadies an Japanese CPI Misses Forecasts

The Pound Japanese Yen (GBP/JPY) exchange rate steadied this morning, leaving the pairing fluctuating around ¥134.765 on the interbank market.

The Japanese Yen (JPY) steadied against the Pound (GBP) following today’s release of the year-on-year Japanese National CPI excluding food and energy figures for June.

These improved 0.5%, narrowly missing their 0.6% forecast and fell to their lowest in two years.

The ongoing trade uncertainty between the US and China have proved a drag on Japan’s factory production, with today’s data also confirming dwindling domestic demand.

Japanese Yen traders, therefore, have become increasingly jittery.

Japanese all industry activity index for May, meanwhile, beat forecasts, rising 0.3%.

GBP/JPY Exchange Rate Rangebound as UK Borrowing Swells to Four-Year High

The Pound failed to benefit from today’s release of the UK Public Sector Net Borrowing figures for June.

These ballooned from £3.822 billion to £6.5 billion in a four-year high.

Reuters said in its statement:

‘Britain’s budget deficit swelled in the first three months of the tax year due to higher debt interest payments and rising spending on services, placing the public finances on a less solid footing ahead of Brexit.’

This has also increased concerns surrounding comments from both Tory leadership candidates, who have pledged tax cuts and increased spending.

Last night saw 17 Tory rebels vote in a House of Commons ballot to prevent the future Prime Minister from suspending Parliament to push through a no-deal Brexit.

Tory veteran Keith Simpson, commented:

‘This is a huge national issue. I said months ago to my local paper and my association that I was totally against no-deal. So this is the first time I have rebelled but you can get a taste for it.’

GBP/JPY Outlook: Japanese Election in Focus

In political news, Japan will go to the polls over this weekend, with Prime Minister Shinzo Abe a favourite to win at the polls.

Izumi Devalier, an Economist at Merrill Lynch International, was downbeat about Abe’s economic policy, however, saying:

‘So far under Prime Minister Abe, there’s just been an excessive reliance on monetary policy to reflate the economy. I think going forward … we need to see more effective use of fiscal policy if downside shocks materialize.’

Japanese Yen investors, however, will be looking ahead to Wednesday’s Leading Economic Index figures for May.

Sterling traders will be looking to Monday’s CBI Industrial Trends Survey for July.

Any signs of improvement could buoy UK market confidence.

Brexit discussions, however, are likely to remain in focus into next week.