UPDATE
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced by around 0.2% on Wednesday morning.
After having declined significantly on Tuesday following Consumer Prices data which showed UK inflation dropped into negative territory, the Pound is holding a relatively weak position on Tuesday morning. A slight appreciation can be linked to speculation that the depreciation was overdone given the lack of price pressures in many advanced nations at this time.
The Canadian Dollar, meanwhile, slumped versus its major peers despite predictions of long-term delays to a Federal Reserve benchmark rate hike. The ‘Loonie’ (CAD) downtrend can be linked to crude oil prices which dived during the Asian session after weak Chinese data signalled a lack of demand from the world’s second-largest economy. China’s stocks dropped 0.9% at the end of the Asian session which further weighed on crude futures.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9887.
Yesterday…
GBP/CAD Conversion Rate Predicted to Edge Lower after British Consumer Prices Contracted
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate softened by around -0.8% on Tuesday afternoon.
In response to disappointing inflation data the Pound dived versus its major peers, despite the fact that the Shanghai Composite Index ended the Asian session higher and British sales growth exceeded expectations. China’s equity market ended the Asian session 0.2% higher; signalling stability after closing trade stronger every day since the 5-day holiday break. This is supportive for the UK because Chancellor George Osborne announced the government’s intentions to merge the British and Chinese stock markets. The BRC Like-for-Like Sales saw yearly growth of 2.6% in September, bettering the median market forecast 1.5% sales growth.
As explained above, the positives were outweighed by a particularly disappointing inflation reading. September’s Consumer Price Index was forecast to hold at 0.0%, but the actual result showed inflation dropped to -0.1%. This caused the Pound to dive versus its peers because the Bank of England (BoE) Monetary Policy Committee (MPC) recently held off from hiking the benchmark interest rate as a result of a complete absence of domestic price pressures.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9780.
CAD/GBP Exchange Rate Forecast to Tick Higher despite Rising US Dollar
Crude prices dropped significantly overnight but resumed appreciation after China’s stocks rose. Futures remain uncertain, however, with many fearing that the glut will continue now that Iran has had production sanctions lifted. The Canadian Dollar softened versus its major peers amid speculation that long-term low oil prices will force the Bank of Canada (BOC) into easing monetary policy.
Also weighing on demand for the ‘Loonie’ (CAD) is a stronger US Dollar. Despite depreciating significantly over the past few weeks amid speculation of long-term delays to a benchmark rate increase, the US asset is still holding a comparatively high value. This has had a detrimental impact on Canada’s economy because trade is less profitable with a high valued US Dollar.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate dropped to a low of 1.9731 during Tuesday’s European session.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Losses on BoE Rate Hike Speculation
Given that the MPC will be very unlikely to increase the benchmark interest rate with inflationary pressures lacking, today’s data is likely to have a long-term detrimental impact on demand for the British asset. Therefore the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate could hold losses for the remainder of Tuesday’s European session. However, any massive swings in crude prices could provoke ‘Loonie’ volatility.
With an absence of Canadian economic data on Wednesday, the GBP/CAD exchange rate is likely to see fluctuations as a result of British labour market data.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced to a high of 2.0049 today.
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