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Pound Sterling Japanese Yen (GBP/JPY) Exchange Rate Edges Up despite Theresa May’s Brexit Deal the ‘Only Option’

Pound Japanese Yen (GBP/JPY) Exchange Rate Rises despite Barnier’s Warnings

The Pound Sterling Japanese Yen (GBP/JPY) exchange rate rose and the pairing is currently trading at an inter-bank rate of ¥138.5970.

Despite the risk of a no-deal Brexit increasing, Sterling was able to rise against the Japanese Yen .

During an interview, the European Union’s Chief Brexit Negotiator, Michel Barnier warned Conservative leadership contenders that Theresa May’s Withdrawal Agreement is not up for renegotiation.

In the interview for the New York Review of Books, Michel Barnier said:

‘If the UK wants to leave in an orderly manner, this treaty is the only option. If the choice is to leave without a deal – fine. If the choice is to stay in the EU – also fine. But if the choice is still to leave the EU in an orderly manner, this treaty is the only option. This is all that our legal constraints allow.’

Sterling (GBP) Rises despite Increased Risk of No-Deal Brexit

Barnier’s comments likely increased the risk of a no-deal Brexit on the 31 October, as many candidates have stated they would not be afraid to leave the EU without a deal.

Former Work and Pensions Secretary, Esther McVey reiterated her insistence that the UK will leave the EU at the end of October.

On Thursday, while speaking to Sky News, Esther McVey stated:

‘There will be absolutely no extension, that will be the date.’

Meanwhile, when questioned about threats made to vote down the government to block a no-deal, McVey stated:

‘That isn’t how parliament works. The only thing that parliament has voted for is Article 50 and the default position is we are coming out without a deal and that date is the 31 October.’

Japanese Yen (JPY) Falls as US-China Trade Tensions Continue

Data released on Thursday showed that foreigners were net sellers of Japanese stocks for a third consecutive week as US-China trade tensions rumbled on.

Meanwhile, China has said the next move in trade discussions must come from the United States.

Speaking in Beijing, Chinese Ministry of Commerce spokesman, Gao Feng said:

‘The US keeps escalating the trade tensions, and makes various tricks, which has severely hurt the trade talks.

‘Whether the China-US trade talks can make any progress largely hinges on the US attitude and sincerity.’

In addition, Gao was questioned about whether China would use its dominant position in rare earths to hit back at the US.

He stated that while China was to prioritise domestic demand, they were willing to meet ‘the legitimate needs’ of the rest of the world and he added:

‘However, if any country wants to use products made using China’s rare earth exports to contain and crack down on China’s development, that can’t be accepted emotionally and rationally.’

Pound Japanese Yen Outlook: Will Higher than Forecast Tokyo CPI Buoy JPY?

Looking towards Friday, the Pound (GBP) could rise against the Japanese Yen (JPY) following the release of the UK GfK consumer confidence.

If it is revealed that consumer confidence has edged up further than expected in May, Sterling could rise.

Meanwhile, the Japanese Yen could rise following the release of the Tokyo Consumer Price Index (CPI) excluding fresh food.

If Japanese inflation rises higher than forecast in May, it could buoy the Yen and cause the Pound Japanese Yen (GBP/JPY) exchange rate to rise.