The Japanese yen rose in the European market on Thursday against a basket of global currencies, extending its gains for the fifth day in a row against the British pound, recording the highest level in five weeks, thanks to receding fears of a widening interest rate gap between Japan and the United Kingdom.

This is in light of the strong speculation about the Japanese central bank being close to exiting the negative interest rate policy, and on the other hand, the Bank of England’s current monetary tightening cycle has ended, according to most of the bank officials’ comments, and a succession of data indicating that there is no need to raise British interest rates again.

The exchange rate of the pound against the yen

The pound fell against the yen by 0.5% to 184.07, the lowest since last November 3, from today's opening price of 184.99, and recorded the lowest level at 184.07.

Yesterday, the pound sterling lost 0.2% against the Japanese yen, the fourth daily loss in a row, after comments from Bank of England Governor Andrew Bailey about the financial stability report in the United Kingdom.

Central Bank of Japan

Data issued in Tokyo during the recent period indicated escalating inflationary pressures on monetary policy makers at the Central Bank of Japan, especially inflation, wages, and labor market data.

It has become possible that these data will exceed the targets during the coming period, which will force the Central Bank of Japan to begin reducing monetary stimulus tools in the country, most notably exiting the range of negative interest rates.

Central Bank of Japan Governor Kazuo Ueda said earlier: The bank may obtain sufficient data by the end of the year to determine whether it can end negative interest rates. Ueda explained: Once we are convinced that Japan will witness continued rises in inflation accompanied by wage growth, there are options. Different we can take.

Bank of England

The Bank of England meets next week to discuss monetary policy appropriate to economic developments in the United Kingdom, as it is widely expected to keep British interest rates unchanged.

Recent comments by members of the Bank of England, with a succession of weak economic data in the United Kingdom, have strongly reinforced the hypothesis that the current monetary tightening cycle is over, with increasing speculation about the timing of cuts in British interest rates.

TD Securities expects the first cut from the Bank of England in May, while the Federal Reserve and European Central Bank are simultaneously expected to cut in June.