Pound to Japanese Yen Exchange Rate Struggles to Climb amid Market Safe Haven Demand
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is edging a little higher this morning, but the outlook remains pressured. Safe haven currencies like the Japanese Yen (JPY) are appealing as the US 2020 Presidential Election still doesn’t have a clear outcome.
Since opening this week at the level of 135.69, GBP/JPY has been fluctuating within a relatively narrow region. GBP/JPY has spent much of the week near resistance at the key level of 135.00.
At the time of writing though, GBP/JPY is trending a little higher again, nearer the week’s opening levels. Hopes that US 2020 Presidential Election results would become clearer soon softened the safe haven Yen’s appeal slightly.
While today’s Bank of England (BoE) news was hardly bullish for Sterling (GBP), the Pound outlook could still rise if global political uncertainty cools.
Pound (GBP) Exchange Rate Outlook Limited as BoE Ramps Up the Dovishness
For much of the week, the Pound has been kept under pressure. Uncertainty in the US 2020 Presidential Election has been highlighting all the uncertainties in Britain’s political outlook, making investors hesitant to buy the British currency.
Britain is headed into a second coronavirus lockdown today. On top of this, the Brexit process could end in a no-deal scenario if no deal is agreed in the coming weeks.
Sterling has seen some slight relief this morning. Hopes that results of the US Election will become clearer soon are softening safe haven demand slightly, and Sterling is edging higher.
The Pound’s movement certainly wasn’t helped by this morning’s Bank of England (BoE) policy decision however.
In response to fresh coronavirus lockdown, the bank announced that it would ramp up quantitative easing (QE). Its forecasts have been updated as well, saying the UK economy will shrink around 11% this year as well as predicting higher unemployment.
Japanese Yen (JPY) Exchange Rates Appealing amid Safe Haven Demand
The Japanese Yen is a safe haven currency. It is often appealing in times of global uncertainty, which has made it strong as the results of the US 2020 Presidential Election continue to come in.
While frontrunner Joe Biden continues to edge closer to victory, the race remains too close to call. Fears that the result could be contested are also making markets anxious, only further boosting safe haven demand.
On top of this, hopes for the Democratic Party to win a full Congress majority have faded, leaving markets doubtful that a big coronavirus stimulus package can be agreed after all.
This is keeping the Yen broadly appealing. The currency’s outlook will remain strong until global market sentiment calms.
Pound to Japanese Yen (GBP/JPY) Exchange Rate Could Climb on US Election Results
The safe haven Japanese Yen is likely to remain appealing so long as global market uncertainty is so high. Of course, this also means that it could tumble again and shed recent gains if markets begin to calm.
As a result, the US 2020 Presidential Election Remains the primary focus for the GBP/JPY outlook in the coming sessions.
More results are expected to come in over the coming day. If these results bring Democrat Joe Biden closer to victory, markets may calm and the Yen may weaken.
On the other hand, signs of the race tightening further may lead to stronger safe haven demand and push GBP/JPY lower again.
Britain will be headed into fresh national lockdown today. Developments over Britain’s coronavirus situation and how it is impacting businesses and the economy will continue to influence the Pound outlook.
As November draws on, UK-EU Brexit negotiations will prove a huge factor in the Pound outlook as well.
Tomorrow’s Japanese household spending is likely to be overshadowed by shifts in risk-sentiment for the Pound to Japanese Yen (GBP/JPY) exchange rate.