The British Pound to Canadian Dollar (GBP/CAD) exchange rate was trending in a tight range on Thursday ahead of the Bank of England (BoE) interest rate decision; in addition the Canadian Ivey Purchasing Managers Index will also be released.
The British Pound to Canadian Dollar (GBP/CAD) exchange rate enjoyed some support early in Wednesday’s European session, hitting a session high of ahead of 1.9232, ahead of the Bank of Canada (BOC) interest rate announcement.
However, the GBP/CAD exchange rate shed a lot of its earlier gains as the British Pound broadly softened—a result of Markit’s UK Services Purchasing Managers Index (PMI) falling in February rather than increasing in line with forecasts.
Oil Prices Rise – Canadian Dollar (CAD) Exchange Rate Climbs
Meanwhile, the Canadian Dollar edged up past 80 US cents versus the US Dollar (CAD/USD) to trend at 0.8010 as a result of oil price increases, but fell back to the 79 cent region shortly after. Despite some economists suggesting that oil could fall by another $20 a barrel as a global oversupply continues, others feel confident the price could increase.
Saudi Arabia upped its priced to Asian and US buyers as conflict overshadowed oil facilities in Libya. West Texas Intermediate oil reached $50.32 US Dollars per barrel while Brent reached $61.06.
However, as previously mentioned, the global glut of oil doesn’t appear to be retreating. Citbank commodities research expert Ed Morse commented: ‘The fact of the matter is we are running out of storage capacity in the US.’
The Canadian Dollar had advanced on Tuesday when Canada’s Gross Domestic Product (GDP) stat rose above forecasts. Year-on-year, GDP reached 2.8% in December from 2.0%, bypassing the 2.5% prediction.
Economist Benjamin Reitzes commented: ‘The twin GDP reports are encouraging and highlight that the Canadian economy was doing pretty well even amid the initial drop in oil prices. However, that strength isn’t expected to last, with the early 2015 data likely to soften.’
Meanwhile, with strong Manufacturing and Construction PMI’s released on Monday and Tuesday, economists had expected the British Pound to gain on the back of favourable Services PMI. However, instead of rising, the index fell and investor sentiment in the British Pound was dented.
The UK Composite PMI remained at 56.7, while the Services PMI slipped from 57.2 to 56.7. However, Markit suggests that the services sector saw an increase in wages and that was the cause for increased costs within the sector.
The Markit report read: ‘The combination of relatively robust economic growth, the improving labour market and signs that wage growth will pick up in coming months suggests the Bank of England will come under increasing pressure to tighten policy later this year.’
In addition, the British Pound fell away from near seven-year highs versus the Euro (GBP/EUR) after the service sector figures. Just before the announcement, the British Pound to US Dollar (GBP/USD) exchange rate hit the session low of $1.5337.
British Pound to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The British Pound to Canadian Dollar (GBP/CAD) exchange rate could be in for fluctuations on Thursday with the Bank of England (BoE) announcing its latest interest rate decision. The central bank isn’t expected to hike rates any time soon amid a backdrop of tumbling inflation, but the hype around the event may cause the British Pound to swing.
Both the BOC and the BoE are forecast to keep rates steady at this week’s meetings.
The British Pound to Canadian Dollar (GBP/CAD) exchange rate is residing at 1.9195. The Canadian Dollar to British Pound (CAD/GBP) exchange rate is trending in the region of 0.5215.
