UK’s Refusal to Extend Brexit Deadline Leaves the Pound Japanese Yen (GBP/JPY) Exchange Rate Lower

May 15, 2020 - Written by John Cameron

STORY LINK UK’s Refusal to Extend Brexit Deadline Leaves the Pound Japanese Yen (GBP/JPY) Exchange Rate Lower

Pound Sterling Japanese Yen (GBP/JPY) Exchange Rate Falls as the UK Not Keen to Compromise on Brexit

The Pound Sterling Japanese Yen (GBP/JPY) exchange rate slumped by around -0.5% this morning. This left the pairing trading at around ¥130.7370.

Sterling suffered losses on Friday as weak data due to the coronavirus crisis and Brexit fears continued to plague the currency.

GBP fell against the Yen after Boris Johnson’s government reiterated its refusal to extend the current Brexit period beyond December.

Added to this, Johnson’s government said it was not keen to compromise with the European Union on trade negotiations.

Commenting on this, Ipek Ozkardeskaya, a senior analyst at Swissquote Bank said:

‘The Sterling outlook remains negative as the latest round of Brexit negotiations this week didn’t show any signs of progress in key areas.’

Meanwhile, GBP continued to suffer losses after survey data revealed that British manufacturers were not as confident about the swift return to work.

The survey from Made UK revealed manufacturers believe it will take longer to recover from the effects of the coronavirus pandemic, compared to just a few weeks ago.

Around three-quarters expect business will not be back to normal within a period of six months. Added to this, around 36% of those surveyed by Made UK expect it will take more than a year to return to some sort of normality.

Commenting on this, Stephen Phipson, Make UK’s chief executive stated:

‘It’s clear that it is going to be a long road back to anything like normal trading conditions and, despite the lockdown beginning to be lifted, there will be a significant impact on companies and jobs for some time to come.’

Japanese Yen (JPY) Rises as US Reignite Tensions with China

The Japanese Yen made gains against the Pound on Friday as reignited trade tensions between the US and China caused little reaction.

US President Donald Trump escalated tensions with China overnight after stating the United States may cut all ties with China over the coronavirus pandemic.

Some analysts expect markets are used to the US President’s rhetoric, and according to Kiwibank dealer, Mike Shirley:

‘I don't know whether it's because the world's got other things to concentrate on, like Covid-19, or maybe the world's got used to the rhetoric.’

However, the safe-haven Japanese Yen was able to make gains against the Pound as worried investors flocked back to safety on the threat of a second wave of coronavirus infections.

The Yen was able to remain steady against the US Dollar (USD), although edged lower this week after US Federal Reserve officials said the bank was unlikely to take rates into negative territory.

Pound Japanese Yen Outlook: Will Japan’s Economy Enter a Technical Recession?

Looking ahead, the Japanese Yen (JPY) could suffer some losses against the Pound (GBP) following the release of growth data.

If Japan’s GDP slumps in the first quarter of 2020 following a contraction in the final quarter of 2019, it will dampen Yen sentiment as the economy would be in a technical recession.

However, Sterling could give up some of its earlier gains against the Yen following the release of Tuesday’s unemployment data.

If March’s unemployment rate rises higher than expected, it will weigh on the British currency and leave the Pound Japanese Yen (GBP/JPY) exchange rate flat.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Yen Forecasts