GBP/JPY trades vulnerably near 201.60 as Japanese Yen outperforms its peers
- GBP/JPY struggles to hold its immediate support level of 201.60 as the Japanese Yen outperforms across the board.
- BoJ’s Ueda stated that he needed more data to decide upon whether an interest rate hike is appropriate in the October policy meeting.
- UK Reeves confirms further tax hikes in the Autumn Budget in November.
The GBP/JPY pair trades 0.2% lower to near 201.60 during the late Asian trading session Friday. The pair faces selling pressure as the Japanese Yen (JPY) outperforms its peers despite uncertainty surrounding the monetary policy announcement by the Bank of Japan (BoJ) later this month.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.24% | -0.15% | -0.36% | -0.08% | 0.15% | -0.13% | -0.40% | |
| EUR | 0.24% | 0.09% | -0.12% | 0.17% | 0.45% | 0.10% | -0.16% | |
| GBP | 0.15% | -0.09% | -0.18% | 0.04% | 0.34% | 0.00% | -0.31% | |
| JPY | 0.36% | 0.12% | 0.18% | 0.24% | 0.54% | 0.18% | -0.08% | |
| CAD | 0.08% | -0.17% | -0.04% | -0.24% | 0.25% | -0.06% | -0.38% | |
| AUD | -0.15% | -0.45% | -0.34% | -0.54% | -0.25% | -0.34% | -0.60% | |
| NZD | 0.13% | -0.10% | -0.00% | -0.18% | 0.06% | 0.34% | -0.32% | |
| CHF | 0.40% | 0.16% | 0.31% | 0.08% | 0.38% | 0.60% | 0.32% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Earlier in the day, BoJ Governor Kazuo Ueda stated that he needs more data before deciding on whether the central bank will raise interest rates this month. “I would like to keep gathering more information and scrutinise various data that comes out leading up to our October policy meeting,” Ueda said in a news conference in Washington, according to Reuters.
On the political front, Japan’s Liberal Democratic Party (LDP) Sanae Takaichi continues to persuade her opposition leaders to support her for the prime ministerial role in voting expected next week.
Meanwhile, the Pound Sterling (GBP) exhibits a mixed performance against its peers, with investors seeking cues on how much United Kingdom (UK) Chancellor of the Exchequer Rachel Reeves will raise taxes and cut spendings to meet her fiscal targets. Reeves confirmed in an interview on Thursday that she would raise taxes to maintain a decent fiscal buffer, but denied plans of raising wealth tax.
On the monetary policy front, Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann has argued against reducing interest rates further, citing that labor market conditions are weakening only at a moderate pace. “What has transpired is that the labour market has modestly loosened but it is not falling off of the cliff,” Mann said in an event in Washington on Thursday, Reuters reported.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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