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Pound Japanese Yen (GBP/JPY) Exchange Rate to Hold Strong Ahead of BoJ’s Interest Rate Decision?

Pound Japanese Yen

GBP/JPY Exchange Rate to Enjoy Sustained Tailwinds in Lead Up to Japan’s Interest Rate Decision?

The Pound Japanese Yen (GBP/JPY) exchange rate is climbing this afternoon, having wavered throughout the course of today’s session. If the Bank of Japan (BoJ) leaves its interest rate unchanged on Thursday, as expected, GBP/JPY is likely to extend current gains.

At the time of writing, GBP/JPY is trading at ¥156.5380, up 0.3% from today’s opening levels.

Pound (GBP) to Find Support on Distributive Trades Data?

The Pound (GBP) is likely to enjoy tailwinds tomorrow if the UK’s CBI distributive trades data prints as expected. The survey’s retail sales balance is predicted to rise to 13 from 11 in September, demonstrating growth – albeit fractional.

Last month’s release showed that internet sales growth slowed in the year to September: according to the Office for National Statistics (ONS), UK retail sales also fell 0.2% last month.

The UK’s Autumn budget release on Wednesday may also exert upside pressure on the Pound, if cash injections are seen across healthcare and the education sector, as indicated.

The UK Treasury has also reported an expected increase in the minimum wage, to £9.50 an hour. Chancellor Rishi Sunak is expected to confirm this tomorrow, and has already commented:

‘This wage boost ensures we’re making work pay and keeps us on track to meet our target to end low pay by the end of this parliament.’

A lack of significant data midweek will leave GBP vulnerable to downside pressure; however, if today’s risk-on mood persists over the next few days, the Pound will find support on trading sentiment.

Japanese Yen (JPY) Subdued Ahead of Thursday’s Rate Decision

The Japanese Yen (JPY) is trading down against the Pound ahead of Thursday’s interest rate decision, as a risk-on market mood weighs upon the safe-haven currency. JPY sentiment is also dented by downbeat forecasts for the country’s export industries.

The Yen traded up against GBP from a monthly low last week, as inflation data exceeded forecasts and risk-off headwinds subdued Sterling. Exports and imports rose more than forecast in September, although the annual statistics are still recovering from last year’s collapse.

Into this week, a lack of significant data limits JPY upside. The worldwide computer chip shortage is expected to hit Japan’s exports, especially automobiles, over the next six-to twelve months.

If Bank of Japan (BoJ) policymakers reiterate last month’s dovish tone on Thursday, the Japanese Yen will likely fall, with support dampened by a downbeat forecast amid supply-chain disruptions.