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Pound Japanese Yen (GBP/JPY) Exchange Rate Sinks as UK Announces October 31 Brexit ‘Whatever the Circumstances’

GBP/JPY Exchange Rate Falls as No-Deal Brexit Fears Rise

The Pound Japanese Yen (GBP/JPY) exchange rate fell today, leaving the pairing trading around ¥129.067.

The Pound (GBP) fell against the Japanese Yen (JPY) following an announcement from Downing Street today in which Prime Minister Boris Johnson’s spokesman declared that the UK would leave the EU on 31 October ‘whatever the circumstances’.

The Government’s spokesman said:

‘We must restore trust in our democracy and fulfil the repeated promises of parliament to the people by coming out of the EU on 31 October. Politicians cannot choose which votes to respect. They promised to respect the referendum result. We must do so.’

As a result, Sterling has struggled today on heightened no-deal fears as negotiations between the UK and the EU have failed to show any progression since last week.

The Pound failed to benefit from today’s publication of the UK Markit Services PMI for July, which rose from 50.2 to 51.4.

Chris Williamson, a Chief Business Economist at IHS Markit, was downbeat, commenting:

‘[T]he overall picture is one of an economy that is only just managing to skirt recession, with July’s performance among the worst since the height of the global financial crisis in 2009.’

JPY/GBP Exchange Rate Increases as Japanese Yen Benefits from Global Trade Uncertainties

The Japanese Yen (JPY) benefited from the rising threat of a currency war between the US and China today.

This follows new that China had weakened the Chinese Yen as a possible measure against freshly imposed US tariffs on Chinese imports last week.

Today saw the publication of the Japanese Services PMI for July, which came in below expectation, easing from 51.9 to 51.8.

Joe Hayes, an Economist at IHS Markit, said:

‘Service sector growth in Japan continued to ebb along sideways at the start of the third quarter, failing to break out of the modest expansion trend we’ve seen so far in the year-to-date.’

GBP/JPY Outlook: UK Retail Sales and Japanese Spending Figures in Focus

Pound traders will be looking ahead to tomorrow’s release of the UK BRC Like-For-Like Retail Sales figures for July, which are expected to improve, rising from -1.6% to 0.1%.

Tomorrow will also see the Japanese Overall Household Spending figures for June, which are forecast to ease.

The Japanese Leading Economic Index, meanwhile, is expected to rise from 94.9 to 95.

The GBP/JPY exchange rate is likely to remain volatile this week as no-deal Brexit fears are expected to increase as tensions between the UK and the EU over the Irish backstop will remain in focus.