While the Yen softened against the US Dollar and edged back towards a five-year low overnight, the Asian asset remained stronger against the Pound having gained on its British peer yesterday.
Sterling broadly weakened as a result of a slightly disappointing UK services report and comments issued by the Chancellor of the Exchequer regarding the need for more spending cuts.
The Pound was little changed this morning is spite of an upbeat British Chambers of Commerce survey.
Although the report indicated that the UK’s economic recovery will continue, with further strengthening in the near term, Sterling continued trading lower against rivals like the Yen.
But even as the Yen put in a solid performance against the Pound it fell against the ‘Greenback’ as investors considered the opposing fiscal policies adopted by the Federal Reserve and Bank of Japan.
The recent run of positive US data has increased the odds of the Federal Reserve tapering stimulus in the months ahead. The BOJ, on the other hand, looks set to maintain its unprecedented level of stimulus in order to help bring Japan’s persistent deflation to an end.
According to one Singapore-based currency strategist; ‘All the monetary easing that the BOJ had announced earlier last year seems to be on target for now. There’s definitely a very strong monetary policy divergence, which will also be a very powerful [Yen] driver.’
The GBP/JPY pairing was little affected by a report showing that Japan’s monetary base advanced 47 per cent in December, year on year, to a record level of 193.5 trillion Yen.
As the week continues further Pound-Yen movement could occur in response to UK trade balance figures and the Bank of England’s rate decision.
Japanese foreign bond buying figures will also be of interest.
Current Japanese Yen (JPY) Exchange Rates:
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The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 104.3000 >
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 170.8900 <
The Euro/Japanese Yen Exchange Rate is currently in the region of: 142.0460 >
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 86.2791 <
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 93.0356 <
(Correct as of 10:10 GMT)
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