Pound Japanese Yen Exchange Rate Edges Higher as Japanese Economy Suffers from Nation’s Covid-19 Vaccine Delay

May 18, 2021 - Written by John Cameron

STORY LINK Pound Japanese Yen Exchange Rate Edges Higher as Japanese Economy Suffers from Nation’s Covid-19 Vaccine Delay

GBP/JPY Exchange Rate Rises as Japanese GDP Data Disappoints

The Pound Japanese Yen (GBP/JPY) exchange rate rose today after the Japanese economy shrank more than expected because of high rates of Covid-19 in Japan earlier this year. The pairing is currently trading around ¥154.79.

The Japanese Yen (JPY) suffered today after the Japanese economy was reported to have shrunk more-than-expected in the first quarter because of Japan’s slow Covid-19 vaccine rollout.

Takeshi Minami, the chief economist at Norinchukin Research Institute, commented on the latest Japanese growth data:

‘That domestic demand is weak shows the adverse effects from the coronavirus haven’t been shaken off at all.’

As a result, the Japanese Yen has suffered from growing concerns for Japan’s economy, which could continue to lag behind due to the nation’s delay in rolling out coronavirus vaccines.

In other Japanese economic news, today saw the release of March’s Tertiary industry index. The figure beat forecasts and rose by 1.1%, buoying confidence in Japan’s industrial sector.

Pound (GBP) Exchange Rate Edges Higher as UK Jobs Data Boosts Confidence in Nation’s Economy

The Pound (GBP) rose today after the latest UK jobs date revealed that the UK’s jobs sector has begun to recover thanks to the Government’s Covid-19 vaccination rollout and easing lockdown restrictions.

Jeremy Thomson-Cook, the chief economist at Equals Money, commented on the latest UK jobs data:

‘Jobs data from the UK showed the first gain in employment since the pandemic began with 84,000 gaining jobs in April as the economy emerged from the latest series of lockdowns. The labour market is very much a two-tier story at the moment; jobs either being snapped up by high-skilled workers furloughed or made redundant through the pandemic or low-skilled workers remaining unable to gain new employment.’

As a result, GBP investors have become more confident about the outlook for the UK economy, especially now that further lockdown restrictions have been eased this month.

Prime Minister Boris Johnson also said today that the threat posed by the India variant of Covid-19 will be clearer ‘in a few days’.

Consequently, UK markets have become more cautious as the India Covid-19 variant could jeopardise the Government’s plan to further ease lockdown restrictions next month.

Pound Japanese Yen (GBP/JPY) Exchange Rate Forecast: Could Downbeat Japanese Economic Data Weaken JPY?

Pound (GBP) traders will be looking ahead to tomorrow’s publication of the latest consumer price index for April.

Any signs of further improvement in the outlook for the British economy would drive up the Pound to Japanese Yen exchange rate.

However, growing concerns over the India variant could limit the appeal if it looks increasingly likely to derail the Government’s lockdown easing roadmap.

Japanese Yen (JPY) traders will be looking ahead to tomorrow’s release of the Japanese trade data in the form of imports and exports.

The Pound Japanese Yen (GBP/JPY) could continue to head higher, however, if the outlook for the Japanese economy continues to deteriorate.

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TAGS: Pound Yen Forecasts