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Pound Japanese Yen (GBP/JPY) Exchange Rate Falls as Japanese Trade Balance Figures Improve

GBP/JPY Exchange Rate Slips as BoJ is Downbeat

The Pound Japanese Yen (GBP/JPY) exchange rate is down today and is currently trading around ¥145.3200 on the inter-bank market.

The Japanese Yen (JPY) gained against the Pound (GBP) today following the publication of the Japanese trade balance figures for February, which rose above expectation to ¥489.2bn.

However, the Japanese Consumer Confidence Index figures for March fell further into contraction today at 40.5.

Fears that the Japanese economy could sink into a recession are running high following the Bank of Japan (BOJ) announcing its most downbeat view in six years, which focused on regional economies.

An official for the BOJ said:

‘We have had to cut our assessments on exports and output for some regions because we’re hearing more complaints about the impact of the global economic slowdown than three months ago.’

Sterling has, however, fell against the Japanese Yen today despite renewed hopes that cross-party talks between the Conservatives and Labour could break the Brexit deadlock.

GBP/JPY Exchange Rate Falls as No-Deal Fears Haunt UK Markets as Brexit Clock Ticks

Prime Minister Theresa May delivered a more informal and relaxed address than normal last night, saying that a developing relationship between the two parties is proving positive for on-going Brexit developments.

Hinting at the benefits of cooperation between the parties, May said:

‘People didn’t vote on party lines when it came to the Brexit referendum. And I think members of the public want to see their politicians working together more often.’

The Pound, however, has struggled to gain against the Japanese Yen as fears of a no-deal Brexit continue to haunt UK markets ahead of the imminent leaving day this Friday, 12 April.

Many Sterling traders will be paying close attention to the House of Lords today which will conclude its examination of a bill from the Labour MP Yvette Cooper, and Tory Sir Oliver Letwin, which would force Theresa May to consult with Parliament over any possible delays to Brexit.

GBP/JPY Forecast: Sterling Could Rise if the EU Grant Brexit Delay

Japanese Yen traders will be awaiting tomorrow’s publication of the Japanese machinery orders figures for February, which are expected to improve.

This will be followed by an important speech by the BoJ’s Governor, Haruhiko Kuroda, and any indications that a tax hike could be postponed could weaken the JPY/GBP exchange rate.

Takeshi Minami, a Chief Economist at Norinchukin Research Institute, said:

‘Chances are fifty-fifty that [President] Abe may delay the sales tax hike again. If the sales tax is delayed, the BOJ would come under pressure for further easing.’

Pound traders will be looking ahead to Wednesday this week, with the emergency EU summit due to discuss Brexit.

Any indications that the EU could extend Article 50 would reduce the likelihood of a no-deal Brexit, and benefit the GBP/JPY exchange rate.