In the immediate aftermath of the Scottish referendum, which saw the Unionists victorious, Sterling gained against all sixteen of its most major traded currency peers. This includes a weekly high Pound to ‘Loonie’ (CAD) exchange rate. Sterling has since softened against the ‘Loonie’ after Canadian inflation data printed positively.
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.7856.
During the build up to the Scottish referendum Sterling softened considerably. This is due to risk aversion as an independent Scotland would have seriously damaged the value of Sterling. The Pound did regain some ground on Thursday, however, after most analysts predicted that the outcome would be a ‘no’ to independence.
Recent British economic data has been a little alarming from an economic standpoint. The Consumer Price Index, which is the key measure of inflation, declined from 1.6% to 1.5%. This declination, whilst not massive, is bad news because the Bank of England has set their inflation target at 2.0%.
British labour market data provided mixed results. Unemployment showed a positive fall from 6.4% to 6.2%, but average weekly wages only increased by 0.6% which is the coolest rate of growth since comparable records were introduced in 2001. The lack of correlation between wage growth and inflation has always been a sore spot for the British economy, and doesn’t seem to have changed; as evidenced by the data described above.
The Canadian Dollar has suffered from the global decline in commodity prices. As the sixth-largest crude oil producer on the planet the waning demand has hurt the ‘Loonie’ significantly. Data from China and the US suggests that the supply of oil far outweighs the current demand.
Although none of the world’s ten largest gold mines are located in Canada; gold is Canada’s second largest export and home to almost three-quarters of the world’s mining companies, making it the fourth largest gold mining country in the world. The recent drop in demand for gold, which can be attributed to the Federal Reserve increasing forecasts for interest rates, has had a detrimental effect on the Canadian economy, and therefore the strength of the ‘Loonie’.
The Pound Sterling to Canadian Dollar exchange rate hit a low today of 1.7814.
With a lack of British economic data on Friday the Pound has enjoyed the gains from the unionist victory in the Scottish referendum. A 55% majority is a lot closer than many English members of parliament had originally predicted.
Friday’s Canadian data has printed positively. The year-on-year Consumer Price Index maintained the previous figure of 2.1%. This means that inflation has fallen nicely within the Bank of Canada’s target of 1-3%. The Core Consumer Price Index also hit 2.1%. In response to this favourable inflation data the Canadian Dollar has firmed up against the Pound Sterling.
The Pound Sterling to Canadian Dollar exchange rate has reached a high today of 1.8118.
The Pound to Canadian Dollar Exchange Rate Forecast for Next Week
Monday 22nd September
Monday’s economic calendar is particularly sparse and there is a complete absence of economic data from both the UK and Canada. Therefore it is likely that neither currency will be subject to much volatility; any movement is likely to be dictated by foreign currency changes and geopolitical developments.
Tuesday 23rd September
Tuesday’s British data will be reasonably inconsequential in terms of provoking wider market movement. The data publications include; BBA Loans for House Purchase, Public Finances, Public Sector Net Borrowing- Central Government, Public Sector Net Borrowing and Public Sector Net Borrowing ex Intervention.
Conversely Canadian data will be of much greater significance than that of the UK’s. MonthlyRetail Sales is expected to decline from 1.10% to 0.40%, and Retail Sales including Autos is predicted to fall from 1.50% to -0.20%.
Wednesday 24th September
Once again there will be nothing in terms of economic data publications for either the UK or Canada. This means that they will likely continue on the course set by the previous day’s data results. As before; any movement is likely to be dictated by foreign currency changes and geopolitical issues.
Thursday 25th September
Thursday’s British economic data is alike Tuesday’s in terms of its lack of influence on market volatility, but will still make a good economic gauge for those invested in Sterling. The data includes; Nationwide House Prices (Non-seasonally adjusted), Nationwide House Prices (Seasonally adjusted), CBI Reported Sales and the Hometrack Housing Survey.
There will be only one solitary publication pertaining to Canada on Thursday. Average Weekly Earnings is unlikely to provoke any major volatility especially considering that the recent inflation data printed positively.
Friday 26th September
There will be nothing in terms of economic data for either the UK or Canada on Friday. However, the US Gross Domestic Product data is very likely to provoke wider market volatility, not least for the Canadian Dollar.
