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Pound Japanese Yen (GBP/JPY) Steadies as Japanese Growth Figures Improve

GBP/JPY Exchange Rate Rangebound as Japanese Economy Remains in ‘Soft Patch’

The Pound Japanese Yen (GBP/JPY) exchange rate is steady today and is currently trading around JP¥140.0700 on the inter-bank market.

The Japanese Yen (JPY) stabilised against the Pound (GBP) following the publication of the flash Japanese GDP figures for the first-quarter, which rose above the expected 0.0% to 0.5%.

Yoshiki Shinke, a Chief Economist at Dai-ichi Life Research Institute, remained cautious however, saying:

‘I still think that the economy is in a soft patch and risks are on the downside, with high uncertainties over China’s economy and its trade war with the U.S.’

Meanwhile, Marcel Thieliant, a Japan economist at Capital Economics, said:

‘The surprising resilience of the economy at the start of the year means that GDP growth will be stronger this year than we had anticipated.’

Japanese industrial production figures for March came in better-than-expected at -0.6%, although this was not enough to see JPY rise against Sterling.

US-China trade tensions, however, are weighing on market sentiment in JPY, as Japanese manufacturers brace for the further fallouts between the two superpowers.

GBP/JPY Exchange Rate Flat as PM Promises ‘New and Improved’ Brexit Deal

The Pound (GBP), meanwhile, failed to rise on Prime Minister Theresa May’s promise of a ‘new and improved’ Brexit deal, which she hopes will be passed through Parliament in June’s decisive vote.

Matt Hancock, the Secretary of State of Health, defended May’s new pledge to deliver Brexit, saying:

‘It ultimately will come down to this when MPs are voting: do you want to deliver on the referendum result? Not, is this your perfect resolution to Brexit, and exactly what you want, but this is the piece of legislation that would deliver on the referendum.’

Today saw the publication of the UK Rightmove house price index figures for May, which eased to 0.9% against last month’s 1.1%.

Miles Shipside was optimistic, however, saying that this had ‘defied Brexit’. He added:

‘[D]espite the ongoing political uncertainty, agents are reporting that the lure of the right property at the right price still attracts good interest.’

GBP/JPY Outlook: Brexit Developments to Remain in Focus

Pound traders will be looking ahead to tomorrow’s UK inflation report hearings, and with any signs of the UK economy struggling under political uncertainty, this could begin to weigh on Sterling.

Japanese Yen investors, meanwhile, will be looking further ahead to Wednesday, which will see a slew of economic data, with the focus being on the Japanese export and import figures for April.

The GBP/JPY exchange rate will likely be driven by political developments this week, with many Sterling traders paying close attention to Theresa May’s new and ‘bold’ Brexit deal – and with any signs that this could gain parliamentary traction, the Pound could benefit.