- The GBP/JPY recovers from 192.00 while the Japanese Yen loses strength to possible commercial conversations between the US and Japan.
- Japan has a visit to Washington later this week.
- Investors expect the UK CPI data for new clues about the BOE monetary policy perspective.
The GBP/JPY par attracts offers about 192.00 and stabilizes around 193.50 during negotiation hours in North America on Tuesday. The Cruce bounces as Japanese (JPY) loses strength after Tokyo announced the meeting with Washington this week for third round conversations.
Earlier on the day, the Kyodo news agency in Japan reported that the main commercial negotiator Ryosei Akazawa will visit Washington for commercial discussions later this week. Later, in the European session, the news agency also reported that Japan is considering accepting lower tariff rates of the US and not demanding an exemption.
Meanwhile, the sterling pound (GBP) quietly trades before the consumer price index (CPI) of the United Kingdom for April, which will be published on Wednesday. According to estimates, the general CPI of the United Kingdom rose at a robust pace of 3.3%, compared to 2.6% in March. The underlying IPC, which excludes volatile components such as food, energy, alcohol and tobacco, accelerated to 3.6% from the previous publication of 3.4%.
Hot inflation data signals in the United Kingdom would discourage the officials of the Bank of England (BOE) to cut interest rates again at the June meeting. The BOE reduced its interest rates in 25 basic points (BPS) to 4.25% and guided an “gradual and cautious” monetary expansion approach.
Meanwhile, The Chief Economist of the BOE, Huw Pill, has advised caution on the trimming of interest rates. Pill declared during the European negotiation hours that “the inflation pressure indicators worry me.” Pill was one of the two BOE policies who voted to maintain interest rates without changes.
And in Japanese faqs
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
