Pound to Japanese Yen Exchange Rate Slips from Highs on Fresh Brexit Outlook Uncertainty

Pound to Japanese Exchange Rate Still Sustaining Gains as Investors Leave Safe Havens 

The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is on track to see considerable gains this week. However, as Brexit uncertainty is intensifying in recent sessions, the pair may struggle to return to its best levels. 

Since opening this week at the level of 137.98, GBP/JPY has trended with an upside bias. 

At one point earlier in the week, GBP/JPY touched on a fortnight high of 139.80. GBP/JPY has since slipped from those highs, but still trends strong in the region of 138.96 at the time of writing. 

Coronavirus vaccine hopes are causing markets to sell safe havens like the Japanese Yen (JPY). This could make it easier for the Pound (GBP) to hold recent gains against the Yen going forward. 

Pound (GBP) Exchange Rates Slip Back as Markets Anxious over Brexit Talks 

Optimism that the UK and EU are getting closer to a Brexit deal has been dampened in recent sessions. 

Amid a lack of solid developments in negotiations, markets are once again anxious about comments from officials suggesting that major disagreements remain. 

Sterling’s appeal was further dented today, by reports that EU Chief Brexit Negotiator Michel Barnier could not say if he thought a deal could be reached in time. 

Barnier confirmed this morning that face-to-face Brexit negotiations would continue tonight, following a recent coronavirus quarantine period. 

Japanese Yen (JPY) Exchange Rates Slide as Investors Sell Safe Havens 

The Japanese Yen is a safe haven currency. It often strengthens in times of global market uncertainty, but it falls when markets are more confident about the outlook. 

As a result, the Yen has been falling lately. Markets are becoming more confident that a coronavirus vaccine will help the global economy to rebound next year, which is driving investors to take more risks. 

Japan’s latest data has done little to influence movement in the Yen. Last night’s Tokyo inflation report saw inflation contracting at –0.7% as expected. 

Weakness in the Yen’s rival the US Dollar (USD) is making it easier for the Yen to avoid further losses though. This is keeping GBP/JPY from its best levels. 

Pound to Japanese Yen (GBP/JPY) Exchange Rates Could Remain Strong despite Brexit Jitters 

The Pound to Japanese Yen exchange rate outlook remains fairly high for now, as markets are still optimistic that the global economy will bounce back next year. 

However, GBP/JPY could fall if there are developments that make investors more anxious about the global outlook again. 

For example, if the coronavirus pandemic hits major economies worse than expected, or if there is fresh US political uncertainty, investors may be more eager to buy safe havens and the Yen could strengthen. 

The Pound, on the other hand, will be driven largely be Brexit developments. 

Risk-sentiment could keep GBP/JPY high even amid no-deal Brexit fears. However, if no-deal Brexit fears surge, this could cause GBP/JPY to fall further from recent highs. 

On the other hand, more sturdy Brexit hopes could keep GBP/JPY higher instead. 

Upcoming PMI results for both UK and Japan next week could also influence movement in the Pound to Japanese Yen exchange rate.