Pound to Japanese Yen Exchange Rate Edges Higher as US President Expresses Hope for Trade Deal
The Japanese Yen (JPY) has been one of the strongest performing major currencies over the past couple weeks as safe haven demand has surged, but the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is rebounding for now.
Resilient demand for safe haven currencies like the Japanese Yen amid US economic uncertainties meant that GBP/JPY didn’t even gain much during the Pound’s (GBP) late-April rally.
Last week’s Pound slump was even more bearish versus the Yen, as GBP/JPY plummeted from 146.30 to close the week near the level of 142.90.
GBP/JPY has already seen even further losses this week due to US-China trade war fears briefly rising even higher. This pushed GBP/JPY to a fresh three-month-low of 141.31 yesterday, but since then the pair has rebounded just slightly.
More due to the Japanese Yen slipping back from its best levels than any strength in the Pound, GBP/JPY trended closer to the level of 142.06 at the time of writing.
Investors have been a little less willing to keep buying already strong safe haven currencies since US President Donald Trump expressed confidence that US-China trade negotiations would succeed.
Pound (GBP) Exchange Rates See Limited Gains as Brexit Uncertainties Weigh
The Pound was unable to properly capitalise on the Japanese Yen’s recoil today, as fresh Brexit uncertainties left the British currency weak against most other majors.
Sterling is being supported by remaining hopes that a cross-party soft Brexit deal can be negotiated, but those hopes took another hit today as some MPs from UK Prime Minister Theresa May’s Conservative Party wrote to ask her to abandon the talks.
There is still no certainty in the outlook over how Brexit will proceed or unfold, and if cross-party talks collapse it could lead to months more uncertainty.
There are also concerns that the new populist Brexit party could cause the Conservative Party to haemorrhage support in next week’s EU elections.
Amid Brexit and political jitters dominating the Pound outlook, Sterling was little-affected by this morning’s UK job market report even though the key unemployment rate beat expectations.
Japanese Yen (JPY) Exchange Rate Bullishness Pauses on Trump’s Optimistic Comments
The safe haven Japanese Yen has been one of the most broadly appealing currencies in recent weeks, surging versus an unappealing Pound last week as investors sought safer assets following the latest flare up in US-China trade tensions.
The ongoing US-China trade war has seemingly resumed, despite negotiations between the nations continuing.
Last week saw the US introduce a fresh escalation of tariffs on US imports of Chinese goods, and China followed up with a retaliation this week.
While the ongoing trade uncertainty in markets is keeping safe havens like the Yen appealing, the Yen saw a pause in bullishness today.
US President Donald Trump appeared optimistic that the US and China would reach an agreement on trade despite the fresh trade tariffs. This prompted markets to take a breather and sell the Yen slightly from its best levels in profit-taking.
Pound to Japanese Yen (GBP/JPY) Exchange Rate Investors Anticipate Political Developments
Risk-sentiment and market appetite for safe haven currencies like the Japanese Yen will continue to play a pivotal role in the movement of the Pound to Japanese Yen (GBP/JPY) exchange rate for the remainder of the week.
If US-China trade tensions continue to flare up,and there are no fresh developments in negotiations that point towards a deal becoming more likely, GBP/JPY could be in for further losses as investors would keep piling into safe haven currencies like the Yen.
On the other hand, if trade negotiations do go well and the latest flare up in tensions is doused over the coming sessions, the Japanese Yen could plummet instead as investors would be less eager to hold onto safe havens.
Meanwhile, the Pound will continue to be driven by UK politics and Brexit.
With the EU elections next week quickly approaching, the Pound’s potential for gains may be limited by uncertainties and this could weigh on any potential Pound to Japanese Yen (GBP/JPY) exchange rate recovery.