The GBP/JPY currency pair extended its decline for the second consecutive day, hovering around 185.00 during the European trading session on Wednesday. The Japanese Yen (JPY) strengthened following comments from Bank of Japan (BoJ) board member Junko Nagakawa.
Nagakawa indicated that the BoJ might adjust its monetary easing measures if economic conditions and inflation align with the bank’s projections. Despite a rate hike in July, real interest rates remain deeply negative, and monetary conditions remain accommodative. The BoJ could reconsider its tapering strategy if long-term interest rates rise significantly during upcoming policy meetings.
In the United Kingdom, the Office for National Statistics (ONS) reported that the GDP showed no growth in July, following a similar stagnation in June. This outcome fell short of the anticipated 0.2% growth for the month. Additionally, the Index of Services for July recorded a 0.6% increase on a three-month rolling basis, down from June’s 0.8% rise.
The lack of economic growth supports expectations of a potential quarter-point rate cut by the Bank of England (BoE) in November, with some traders also anticipating an additional rate cut in December.
The UK’s Total Trade Balance also deteriorated, with the deficit widening to £7.514 billion in July from £5.324 billion in June. This represents the largest trade gap since April. Imports fell to a four-month low of £77.12 billion, while exports declined to a 25-month low of £69.60 billion.
Related Topics:
