- UK currency drops off as GDP data disappoints – Services sector continues to bear weight of economy
- EU Referendum debate continues – Immigration is today’s campaign focus
- Canadian Dollar strengthened by commodity prices – Wildfires continue to burn elsewhere
- UK confidence survey due tomorrow – Current forecasts pessimistic
The Pound has been an unsafe option for investors today due to poor domestic data results, as well as EU Referendum instability caused by today’s topic of UK immigration.
The Canadian Dollar has been a far more attractive offering, with gains against most peers stemming from the latest positive development in the price of nationally important commodities.
UK Economic News: GBP Slumps as GDP Data Falls Flat
The Pound has been in a bad way of late, having haemorrhaged previous gains against most of its usual peers.
Among the drops recorded have been -0.3% against the Euro (GBP/EUR), -0.5% against the Australian Dollar (GBP/AUD) and -0.7% against the Canadian Dollar (GBP/CAD).
The Pound’s latest losses are a symptom of today’s poor UK ecostats. These consisted of the second preliminary GDP result and business investment for the first quarter.
In the former case, GDP reprinted at 0.4% on the quarter but dropped from 2.1% to 2% on the year, while in the latter, both the annual and quarterly investment printings came out in negative ranges. In closer detail, the services sector continues to hold up the nation’s economy, although according to EY ITEM Club Senior Economic Advisor Martin Beck:
‘Looking ahead to Q2, the latest services index release showed services output falling in March providing a weak starting point for expansion’.
Elsewhere, the EU Referendum debate focus has shifted to immigration, with ‘Remain’ supporters arguing that immigrants put in more than they take out and ‘Leave’ campaigners countering that the only way to lower current levels of immigration is to leave the EU.
Canadian Dollar Appreciates against Peers on Supportive Commodity Prices
The ‘Loonie’ has been positive in all of its usual exchange rate pairings recently, owing to the fact that the price of oil per barrel on the WTI index has risen to the region of $50 today.
The cost of gold has also jumped up and it is thought that yesterday’s decision for the Bank of Canada (BOC) to freeze the interest rate at 0.5% has further solidified the positive performance of the Canadian Dollar against rivals.
In spite of this positivity, however, the national economy remains under threat from the Alberta wildfires, which have recently necessitated the calling of over 1,000 international firefighters to the region to help control the blaze.
Future GBP, CAD Forecast: Limited Data Releases could see Little Change in Current Exchange Rate Movement
The remainder of the week is set to be fairly devoid of UK and Canadian domestic data, with the scant offerings on offer not expected to hold a great deal of clout by economists.
From the UK will come tomorrow’s early Gfk consumer confidence survey result for May, which has been predicted to fall from -3 points to -4.
Following on from this at some point will be Canada’s CFIB business barometer, which is not expected to be particularly impactful.
More likely to have an impact on the pairing’s exchange rate will be the possibly fluctuating prices of gold and oil, as well as any EU Referendum arguments that are put in ahead of the Purdah period that starts tomorrow.
Current GBP, CAD Exchange Rates
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 1.9046 and the Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate was trending in the region of 0.5259 today.
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