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Pound to Japanese Yen Exchange Rate up on Brexit Hopes despite Safe Haven Outlook

Pound to Japanese Yen Exchange Rate Continues to Trend with Upside Bias

Despite stronger demand for safe haven currencies like the Japanese Yen (JPY) this week, the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is trending higher again today. Pound (GBP) investors are optimistic about the latest Brexit speculation.

This is helping GBP/JPY to keep trending with an upside bias. Last week saw GBP/JPY climb from the level of 134.48 to 136.22, and the pair keeps trending higher.

While GBP/JPY has struggled to hold yesterday’s high of 137.40, the pair is advancing again at today. At the time of writing on Wednesday, GBP/JPY is climbing and trends in the region of 136.80.

The Pound outlook has the potential to improve further if there are optimistic Brexit developments in the coming days and weeks. Meanwhile, if US political uncertainty continues to intensify, the safe haven Japanese Yen may have more reason to strengthen as well.

Pound (GBP) Exchange Rates Supported by Rising Hopes for Brexit Deal

The Pound has been trending stronger since markets opened this week. It comes as investors become slightly more optimistic about the Brexit process after broad uncertainty in September.

Over the weekend, UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed an extension to Brexit talks.

With negotiations expected to continue for an additional month, hopes are rising that noteworthy progress is also being made in talks.

Some analysts, including Mark Holman, CEO at TwentyFour Asset Management, believe talks were getting ‘warmer and warmer’ compared to a month ago:

‘A month ago I would’ve said (UK Prime Minister) Boris Johnson has offended the Europeans to a point where they don’t want to negotiate with him,’

Japanese Yen (JPY) Exchange Rate Steadies as Safe Haven Demand Rises

Market risk-sentiment has been highly mixed this week. Earlier in the week, investors were more willing to take risks again amid news that the US President Donald Trump had been discharged from hospital.

However, risk-sentiment has taken another hit since then. Last night, US President Donald Trump tweeted that US Congress should wait until after the election to push through new coronavirus fiscal stimulus.

This briefly led to a jump in demand for safe havens as markets panicked for the US economic outlook. The Japanese Yen is a safe haven currency that advanced on this news.

Markets have calmed slightly since then, as President Trump said Congress should pass smaller stimulus measures for now.

Either way though, fiscal stimulus hopes are fading. This is limiting risk-sentiment and boosting outlooks for safe havens like the Japanese Yen.

Pound to Japanese Yen (GBP/JPY) Exchange Rate Awaits Political Developments

Investors may be hesitant to move too much on the Pound to Japanese Yen exchange rate in the coming sessions, unless there are some surprising political developments that influence movement.

UK-EU Brexit negotiations will remain the focus for the Pound. If there are any optimistic developments in talks, such as signs of relations improving, the Pound’s appeal could strengthen.

Of course, signs of talks falling apart would instead lead to no-deal Brexit fears and the Pound would plummet.

As for the Japanese Yen, it remains sensitive to shifts in market sentiment. As a safe haven currency, the Yen could be in for further gains if US political uncertainty intensifies, such as if US President Donald Trump’s coronavirus illness worsens.

Pound to Japanese Yen (GBP/JPY) exchange rate investors will also be closely watching tomorrow’s speech from Bank of Japan (BoJ) Governor Haruhiko Kuroda.