On Monday the Pound to Canadian Dollar (GBP/CAD) pairing recovered some of Friday’s losses as the Canadian Dollar declined in response to an unexpected drop in a measure of Canadian business confidence.
Last week the ‘Loonie’ posted widespread gains as domestic employment data trumped expectations, adding to the case for interest rates increasing in the near future.
While the Canadian Dollar largely held this gains over the weekend it faltered against the Pound on Monday as a local report fell slightly short of forecasts.
The business outlook future sales gauge fell from 29 in the fourth quarter of last year to 27 in the first quarter of 2014 rather than rising to 31 (as forecast by economists).
However, the Bank of Canada business survey did show that companies were comparatively optimistic about hiring in the near future given the patchy nature of recent economic reports.
In a statement published with the quarterly report it was said that the result reveals ‘encouraging signs for the economic outlook, although responses indicate that headwinds from intense competition and domestic uncertainty persist. […] Many businesses continue to report that uncertainty – most often related to domestic demand or, in some cases, sector-specific or regulatory factors – is leading them to delay or shift the focus of their investment plans’.
Meanwhile, the Bloomberg Nanos Confidence Index for Quebec declined in the week ending April 4th, with the measure dipping from 56.6 to 54.4. While this was the most significant drop since February last year the index for Canada as a whole did increase slightly, moving from 58.0 to 58.1.
Pound movement was minimal as investors disregarded today’s UK Lloyds employment confidence measure and focused on the week’s more influential British reports.
That being said, Sterling did come under some pressure as the Royal Bank of Scotland asserted that investors should sell the Pound against the US Dollar as ‘rising political risk and less favourable moves in rate spreads’ have an impact on the pairing.
In the view of one London-based industry expert; ‘The Pound is consolidating at higher levels. The currency has lost some upward momentum and may need some upside surprises in economic data to move higher in the near term. But that doesn’t change our view that the Pound will be underpinned by the recovery.’
Over the next few days Canadian data is a little limited, although investors will be keeping an eye on the nation’s housing starts and building permits figures.
Movement in the GBP to CAD exchange rate is more likely to be driven by UK news, including tomorrow’s industrial/manufacturing output reports and the NIESR GDP estimate.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5486,
Canadian Dollar,,US Dollar,0.9112,
Canadian Dollar,,Euro,0.6630,
Canadian Dollar,,Australian Dollar,0.9828,
Canadian Dollar,,New Zealand Dollar,1.0526,
US Dollar,,Canadian Dollar ,1.0998,
Pound Sterling,,Canadian Dollar,1.8228,
Euro,,Canadian Dollar,1.5078,
Australian Dollar,,Canadian Dollar,1.0173,
New Zealand Dollar,,Canadian Dollar,0.9605,
[/table]
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