As a pair, GBP/JPY is considered a “cross.” The name “cross” refers to the fact that the US dollar (USD) is not used in calculating the exchange rate. The ability of GBP/JPY to change dramatically is one of the recognizable attributes of the pair. From a historical perspective, the 2008 global financial crisis and the 2016 Brexit referendum are a clear illustration of how much GBP/JPY can be overcome before the correction.
For the period starting at the end of 2007 and ending at the beginning of 2009, the pound has shown stress due to the global credit crisis. Thus, the GBP/JPY rating reflected this weakness and experienced a prolonged downtrend.
A unique fact that affects the appreciation of GBP/JPY is the relationship between the yen and the price of energy. Japan relies on imports of crude oil and natural gas products as a means of meeting domestic energy needs. As of the end of 2014, Japan ranked fourth in the world in imports of crude oil, and second in imports of natural gas.
Yen and energy prices are intertwined, and one often determines the next value of the other. Research data show that there will be a significant increase or decrease in energy prices; the value of the yen will be immediately visible at jumps of different levels. As a result, the correction of the yen value directly affects the performance of the entire pair – GBP/JPY.
In addition to energy prices, many other vital factors determine the volatility that the GBP/JPY rating faces. The political atmosphere, domestic monetary policy, and the combined economic effect of each country play a role in ensuring stability or creating chaotic conditions on exchanges with a pair of GBP/JPY.
The British pound currency, also called the “pound sterling” or merely the “pound,” is referred to as the fourth most familiar currency in the forex market. In addition to trading in large volumes, the pound is also the third-largest currency in the world, which is in reserve, after the US dollar and the euro. The central currency bank is the Bank of England.
Sterling is a currency that is considered one of the oldest in the world and is still used.
With a total output of 2.66 trillion dollars a year, the UK is in tenth place in terms of GDP purchasing power worldwide. Great Britain is the third-largest economy in Europe after Germany and France. The primary industries that stimulate production are agriculture and energy production (coal, oil, and natural gas).
Services such as banking, insurance, and other business services account for most of the GDP.
The Japanese yen is the most traded currency in Asia and is trading with the third largest world volume. Today, there is only one yen in circulation, worth about $ 1 trillion. This estimate links the yen and the US dollar in second place after the euro. The official central bank is the Bank of Japan.
The appearance of the yen is explained by the Meiji recovery phase from the mid-19th century. The new currency law of 1871 centralized and created a unified monetary system in Japan, similar to the then European currency structures. In 1882, the Bank of Japan became the Central Bank of Japan and merged 153 nationalized Japanese banks. As a result of World War II, in 1949, the yen was pegged to the dollar 1:1, which corresponded to the Bretton Woods monetary system. This exchange rate remained valid until 1971.
The economic situation in Japan is very focused on export activities, so in Japan, the practice of starting the devaluation of the yen in favor of the export sector was expanded in the early 1990s. The Japanese yen is the national currency of Japan, to which no other state is directly tied, and which it directly uses as the national currency.
The results show that some indicators affect the GBP/JPY currency pair. And if you know with what report you can analyze potential income, this is the first step to making money. If you learn to correctly interpret and use a combination of stories to form the direction of trade, this is an excellent start for trading.