The Pound Sterling to Canadian Dollar exchange rate is trending around 1.820, hitting a low of 1.8188 and a high of 1.8226. Movement is currently around 0.09% which is most likely a response to an interview given on Sunday by Bank of England (BoE) governor Mark Carney.
The week just passed was despicable in terms of the strength of Sterling. The unfortunate miscorrelation between falling unemployment and lack of wage growth created spiralling Sterling softness across the board.
Increasing issues compounded following a dovish Bank of England inflation report in which the current monetary policy remained unchanged. The sudden change in focus from unemployment to wages quashed speculation of an interest rate hike before the end of the year.
For the majority of the week the Canadian domestic data docket was sparse. Monday saw a positive result pertaining to Canadian Housing Starts. Having been forecast to drop from 198,700 to 193,000 the result was a surprising rise to 200,100.
The bullish run of the Canadian Dollar against the Pound was extended on Friday with a number of positive data results. Canadian unemployment saw a dip from 7.1% to 7.0% and change in employment rose significantly.
Today has seen a reversal in fortune for Sterling. The weak speculation of a pre 2015 rate hike has been made more robust following a Sunday Times interview this morning with Bank of England governor Mark Carney. Carney intimated that ‘We have to have the confidence that prospective real wages are going to be growing sustainably’ before raising borrowing costs. ‘We don’t have to wait for the fact of that turn to raise them.’ It is important to note, however, that any rate hike is likely to be gradual.
Carney suggested that the officials are ‘united’ in the opinion that rate increases need to be piecemeal in order to accommodate the added strain of higher borrowing costs.
Sterling also strengthened slightly as a result of a revision to the second quarter UK Gross Domestic Product (GDP) data which resulted in an economic growth of 0.2% from pre-crisis levels.
With very little by way of domestic data releases; the ‘Loonie’ (CAD) has been relatively static today. It has weakened against Sterling as a result of a boost to the sentiment towards the Pound, rather than because of a poor Canadian data result.
The Pound Sterling to Canadian Dollar exchange rate has hit a low of 1.8188.
Forecast for the GBP/CAD Exchange Rate
Tuesday will see two domestic data releases which are likely to incite movement for the Pound. The year-on-year Consumer Price Index (CPI) is a valuable measure of inflation for the UK and is forecast to drop moderately from 1.9% to 1.8%. Correspondingly the Retail Price Index (RPI) gives a similar insight into inflation as the CPI. A minimal dip is forecast for RPI from 256.3 to 256.2.
The Bank of England minutes from the monetary policy committee are due for publication on Wednesday. Most analysts predict that the minutes will have less impact on movement than they ordinarily would have because the dovish report saw no change in monetary policy.
Thursday has another packed UK domestic data calendar. Year-on-year Retail Sales are forecast to fall from 4.0% to 3.5%. Retail Sales Including Auto, Public Sector Net Borrowing and Public Finances will all be of interest for those backing the Pound.
Today through to Thursday has very few domestic data releases pertaining to the Canadian Dollar. However, Friday has several data releases of varying importance. Year-on-year Bank of Canada Core Consumer Price Index is expected to rise from 1.8% to 1.9%. Year-on-year Consumer Price Index is forecast to drop from 0.1% to 0.0%.
Most of the movement for the Pound to Canadian Dollar exchange rate is likely to be dictated by UK data given the lack of Canadian data. Friday will see an influence from the Canadian side of things. Expect movement to increase with the growing speculation surrounding UK interest rates.
The Pound Sterling to Canadian Dollar exchange rate hit a high today of 1.8226.
GBP to CAD Exchange Rate Softens Slightly after Faltering UK CPI
The Pound Sterling to Canadian Dollar exchange rate is trending around 1.8146. The fractional softening is likely to be connected to this morning’s UK domestic data, although it is still too early to gauge the severity of the impact.
The year-on-year UK Consumer Price Index was forecast to have dropped from 1.9% to 1.8%, but was revealed to have fallen further to 1.6%. Also the Retail Price Index fell from 256.3 to 256.0.
The potential for the pairing to strengthen is reasonable, however. If the US Consumer Price Index meets with or exceeds its forecast figures it will have a detrimental effect of the ‘Loonie’ (CAD). This is because it could be interpreted as increasing the chance of a rise in US borrowing costs. Whether that will outweigh the poor UK data, if indeed it transpires at all, remains to be seen.
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