The Pound Sterling to Japanese Yen (GBP/JPY) and Pound Sterling to Korean Won (GBP/KRW) exchange rates were both trending lower in Friday’s European trading as investors digested the GfK UK Consumer Confidence fall.
UK Consumer Confidence Slips, Pressuring Pound Sterling (GBP) Exchange Rate Lower
The Consumer Confidence gauge slipped from 4 to 1 in May, despite forecasts to hold steady.
GfK representative Nick Moon commented: ‘No doubt there is some correlation between consumer mood and the economy, the interesting question is which way does the casualty lie?’
Japanese Yen Rises versus Pound (JPY/GBP) as Japanese Unemployment Drops to Seven-Year Low
Meanwhile, the Japanese Yen was offered some support when the Japanese labour market registered a surprising improvement. The Japanese Jobless Rate dropped from 3.4% to 3.3%, the lowest level in seven years.
The Bank of Japan (BOJ) is in an awkward predicament when it comes to the labour market; policymakers are hoping for wage increases in order to encourage consumption and economic growth. However, as the labour market tightens, it appears as if wage growth is still struggling to lift-off.
Economist Marcel Thieliant commented: ‘With economic activity sluggish and price pressures subdued despite a tighter labour market, we remain convinced that the Bank of Japan will have to step up the pace of easing before too long.’
Bank of Japan Easing Bias Forecast to cause Major Yen (JPY) Depreciation
Further easing could place additional pressure on the Japanese safe-haven asset, which has recorded losses this week after the latest BOJ meeting minutes. Policymakers suggested that the economy may be slightly delayed in reaching its inflation target.
Japan’s Household Spending stat also registered a -1.3% contraction on the year in April. Although the figure didn’t rise into growth territory at 3.0% as economists had forecast, the April number is a massive improvement on March’s -10.6%.
The Japanese National Consumer Price Index slipped from 2.3% to 0.6% in April, in line with predictions, and although the core measures excluding food and energy declined also, they printed ever so slightly above forecasts. Inflation excluding fresh food fell from 2.2% to 0.3% while inflation excluding both food and energy tumbled from 2.1% to 0.4%.
Korean Won Climbs against Pound (KRW/GBP), Falls against US Dollar (KRW/USD) as it tracks Japanese Yen BOJ Speculation Losses
Meanwhile, the Korean Won was offered some support against the Pound (KRW/GBP) after a mixed bag of Korean data emerged. The annual Korean Industrial Production figure slipped from a positively revised 0.0% to -2.7% in April while Manufacturing Production also registered losses, sinking from -0.2% to -1.8%.
However, slightly more upbeat were the Korean Retail Sales stats, which registered a rise from a positively adjusted 2.7% to 4.9% in April on the year. The month alone recorded 1.6% growth.
Both the Yen and the Won slipped against the US Dollar (USD) on Friday as investors forecast that a weak Yen would add additional downward pressure on the weakening exports and cause intervention from central banks.
The Pound Sterling to Korean Won (GBP/KRW) exchange rate is trading at 1,695.4200. The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is trending in the region of 189.3100.