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Pound Sterling Japanese Yen (GBP/JPY) Exchange Rate Flat as BoJ Warns of Further Implications of US-China Tensions

Japanese Yen Currency Forecast

Pound Japanese Yen (GBP/JPY) Exchange Rate Muted as Japan’s Economy Affected by Slowing Overseas Growth

The Pound Sterling Japanese Yen (GBP/JPY) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of ¥135.9440.

On Monday, the Bank of Japan (BoJ) slashed its assessment on factory output for two of Japan’s nine regions.

The bank also warned that compared to three months before, more companies were under pressure from the US-China trade tensions.

However, the BoJ maintained its view that regional economies were either expanding or recovering.

Speaking at a meeting of the bank’s regional branch managers, Governor Haruhiko Kuroda said:

‘While Japan’s economy may be affected by slowing overseas growth for the time being, it is likely to continue expanding moderately as a trend.’

Disappointing Machinery Orders Leaves the Japanese Yen (JPY) Flat

Meanwhile, further data revealed that Japanese machinery orders fell the most in eight years.

Yen sentiment was left dampened as it is a worrying sign that global trade tensions are taking a toll on corporate investment.

Month-on-month, machinery orders slumped by a lower-than-forecast -7.8% in May following a rise of 5.2% in April.

This was the largest drop since September.

However, annualised orders fell by a better-than-expected -3.7%.

Sterling (GBP) Muted as Chance of a No-Deal have ‘Never Been Higher’

The Pound continued to remain under pressure as the Conservative leadership contest edges closer to its conclusion.

On Monday, Philip Rycroft, former Brexit Chief warned that everyone should worry about the possibility of a no-deal Brexit.

The former Brexit Chief, who resigned from his position after 18 months said a no-deal was ‘fraught with risk’.

Rycroft added:

‘It’s not in the UK’s interest to have no deal, it’s not in the EU’s interest to have a no deal.

‘I think everybody should be worried about what happens in a no-deal situation. We would be taking a step into the unknown.’

Meanwhile, it was revealed that the Irish Deputy Prime Minister Simon Coveney said the chances of a no-deal have ‘never been higher’.

This likely left Sterling under pressure as Brexit uncertainty continues to increase.

Pound Japanese Yen Outlook: Will Disappointing Japanese Machine Tool Orders Weigh on JPY?

Looking ahead to Tuesday, the Pound (GBP) could rise against the Japanese Yen (JPY) following the release of the BRC’s like-for-like retail sales.

If June’s sales rebound following May’s disappointing slump, Sterling could receive an upswing of support.

Meanwhile, later in the morning the Japanese Yen could slump further following the release of the flash machine tool orders data.

If orders slumps further than expected in June, it could cause the Pound Sterling Japanese Yen (GBP/JPY) exchange rate to rise.