On Wednesday, June 30, the exchange rate of the Pound Sterling and Japanese Yen lowered as UK’s 2021 Q1 economy declined. The GBP/JPY traded lower at 152.861 level as the yen found support from the dissatisfying British market mood.
This morning, the pound has softened in opposition to its six other major rival currencies. It was followed by the confirmation of the Office for National Statistics that the kingdom’s economy contracted during the first quarter of this year.
According to the data, the country’s gross domestic product plummeted by 1.6% in comparison to its previous 1.5%.
An analyst stated that this disappointing contraction is still far from the 20% seen last spring of 2020 during the country’s first lockdown.
Meanwhile, the Japanese yen limits any major gains as the nation’s industrial output crashed further than anticipated.
The data flopped 5.9% last May, which is its largest monthly drop in a year, as a decrease in car manufacturing was seen to be the main cause.
An expert said the fall in Japan’s May industrial production echoed a hit from the extended pandemic curb to contain the COVID-19 virus. In addition, a much more fragile domestic demand clogged the support from exports, which remained robust.
Traders of both Pound and Yen commented that Thursday’s release of the UK and Japan’s Manufacturing Purchasing Managers’ Index might steer any movement in the pairing.
The United Kingdom’s manufacturing PMI is expected to show assisted growth in the sector. It could give Sterling some of its much-needed support.
While the Japanese manufacturing PMI is anticipated to get weaker even though today’s industrial output may cause the sector to subside slightly.
Also, the exchange rate of GBP/JPY will continue to be driven by any further change in the global market mood in the preceding days.
Meanwhile, the USD climbed ahead of the U.S. payroll data released on July 2. The Dollar Index, which trails the greenback in opposition to its six rival currencies, was largely unchanged at 92.080. It is off the one-week high hit during the last trading session.
The USD/JPY traded flat at 110.50 even though Japan’s industrial output was posted as the biggest monthly drop in a year in May.
Also, the EUR/USD pair was flat at 1.1898 after declining overnight.
While the GBP/USD jumped 0.10% to 1.3841 as the United Kingdom’s first-quarter gross domestic product plummeted 1.6%.
Consequently, the risk-sensitive AUD/USD pair also rose 0.10% to 0.7518 after crashing an estimate of 0.70% overnight.