As a pair, GBP/JPY is considered a “cross.” The inscription “cross” refers to the fact that the United States dollar (USD) is not used in the calculation of the exchange rate. For example, at the time of writing (July 2016), the GBP/JPY value is about 140.00. This means that buying one British pound will require 140 Japanese yen or 1 pound = 140 yen. Conversion is made directly, without prior denomination in us dollars.
The ability of GBP/JPY to fluctuate dramatically is one of its recognizable features. From a historical point of view, the 2008 global financial crisis and the 2016 Brexit referendum are a vivid illustration of how far the GBP/JPY is capable of breaking through to a correction.
During the period beginning in late 2007 and ending in early 2009, the pound showed tension caused by the global credit crisis. Accordingly, the GBP/JPY valuation reflected this weakness and experienced an extended downtrend. During the downtrend, the GBP/JPY pair traded from a high of 250.13 to a low of 121.21, which means a decrease of more than 50% of the value.
Although in the shorter term, the result of the United Kingdom’s decision to leave the European Union through the Brexit referendum also caused a severe downward trend in terms of GBP/JPY. Because the market digested the results of Brexit in June of 2016, the GBP/JPY traded with high 160,66 to a minimum of 133,31; monthly yield -27,4%.
A unique fact affecting the GBP/JPY valuation is the relationship between the yen and energy prices. Japan depends on imports of crude oil and natural gas products as a means of meeting domestic energy needs. At the end of 2014, Japan ranked fourth in the world in terms of crude oil imports and second in terms of natural gas imports.
Yen and energy prices are intertwined, and one often dictates the subsequent value of the other. Empirical data show that there will be a significant increase or decrease in energy prices; the value of the yen will be immediately visible in jumps of various levels.Accordingly, the adjustment of the yen directly affects the rate of the entire pair – GBP/JPY.
In addition to energy prices, some other vital factors dictate the volatility facing the GBP/JPY valuation at the moment. The political atmosphere, domestic monetary policy, and the aggregate economic effect of each country play a role in ensuring the stability or chaotic terms of trade that face the GBP/JPY.
The currency of the British pound or the GBP code, which is also known as” pound sterling “or simply as” pound,” is called the fourth most commonly traded currency in the Forex market. In addition to purchasing 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 Bank of the money is the Bank of England.
Sterling is the currency that is considered one of the oldest in the world and is still in use. The first coinage of the pound dates from the late 15th century, and the value of the pound sterling comes from one pound of silver. Initially, the pound was divided into 20 shillings, each consisting of 12 silver pence. The system remained in use until 1971, when the pound underwent a decimal processing process that changed the division of one pound to 100 pence. The pound, during world war II, was most often pegged to our dollar, which corresponded to the Bretton woods monetary system. With its collapse in 1971, the pound took its current form of a “floating currency.”
Economy: the UK ranks 10th in the world in terms of purchasing power parity of GDP with a total output of us $ 2.66 trillion per year. The UK is also 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). The service sector, such as banking, insurance, and other business services, accounts for most of the GDP.
Countries and territories using the GBP include the United Kingdom, the Channel Islands, the Isle of Man, South Georgia, the British Antarctic territory, The South Sandwich Islands and Tristan da Cunha. The following currencies are pegged to the pound sterling: Gibraltar pound, Falkland Islands pound and St. Helena pound. All of them are separate and regional currencies are tied to parity with the GBP.
The Japanese yen is the most frequently traded currency in Asia and is trading with the third largest global volume. Today, there is only a yen worth about $ 1 trillion in circulation. This estimate links the yen and us dollar in second place after the Euro. The official Central Bank of the currency is the Bank of Japan.
The creation of the yen is attributed to the Meiji restoration period, beginning in the mid-19th century. The new currency act of 1871 centralized and created a single currency system in Japan similar to the European currency structures of the time. In 1882, the Bank of Japan became the Central Bank of Japan and consolidated 153 banks of Japan, which were nationalized. In 1949, as a result of world war II, the yen was pegged to the dollar 1:1, which corresponded to the currency system of Bretton Woods. This exchange rate remained in force until 1971.
The Japanese economy is mainly export-oriented, so in Japan, the practice of beginning the devaluation of the yen in favor of the export sector was common in the early 90s of the last century. GDP shows by purchasing power parity (PPP) that Japan is the fourth-largest economy in the world community.
The Japanese yen is the national currency of Japan, and no other States are tied to it directly or directly use it as their domestic currency.
The results allow us to note that there are quite a few indicators that affect the GBP/JPY currency pair. And, if you know what the report can be used to analyze the possibility of earning, this is the first step to making. If you learn how to correctly interpret and use a combination of reports to form the direction of trade, it will be a good start for trading.