Before the publication of Canada’s Existing Home Sales report the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in a stronger position.
The ‘Loonie’ plummeted across the board, losing ground against the Pound, Euro (EUR/CAD) and US Dollar (USD/CAD) amid concerns that the recent drop in oil prices would undermine Canada’s economic outlook and prevent the Bank of Canada adjusting interest rates.
Various factors have contributed to pushing the price of crude oil, Canada’s main export, to an over four-year low of less than 85 Dollars a barrel.
The downturn in the Canadian Dollar prompted this response from economist Emanuella Enenajor; ‘People are beginning to question whether we’re getting into a threshold range where some oil sands production becomes dicey and you might start to see an economic impact. That’s affecting the currency.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell to a low of 1.7979
The more than 0.5% gain in the GBP/CAD exchange rate was aided by the UK’s employment figures.
Although soft inflation levels are still likely to prevent the Bank of England from increasing interest rates before next summer, today’s data did show that the UK unemployment rate fell to its lowest level since 2008, hitting 6.0%.
Sterling gains were limited as the report also detailed a slowing in the pace of employment growth and fairly static average wage growth.
The Pound to Canadian Dollar exchange rate achieved a high of 1.8060
Canada’s Existing Home Sales report compounded ‘Loonie’ losses by registering a -1.4% month-on-month decline in September. This almost wiped out the previous month’s 1.8% gain and was the first fall since January.
Canadian Real Estate Association President Beth Crosbie had this to say of the result; ‘Affordably priced single family homes are in short supply in some of Canada’s hottest housing markets, which contributed to the monthly decline in national sales activity in September. That said, there are other markets with ample supply but sellers there are holding firm on price.’
Furthermore, a steeper-than-forecast decline in US Advance Retail Sales added to concerns that the global economic recovery might be faltering, putting pressure on commodity-driven currencies.
The Pound to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8108
GBP/CAD Exchange Rate Forecast
With the downtrend in oil prices set to continue the Pound to Canadian Dollar exchange rate is likely to hold today’s gains unless BoE policy maker Martin Weale is uncharacteristically dovish during his speech about benchmark interest rates.
The Canadian data to be aware of tomorrow is the nation’s Manufacturing Shipments report.
Shipments are believed to have fallen by -1.8% on a month-on-month basis in August following July’s 2.5% gain.
The BoE’s Jon Cunliffe is also due to speak at London’s yearly BBA Conference.
Before the weekend investors will be focusing on Canada’s Consumer Price Index. Another strong CPI reading could prompt the BOC to reassess its interest rate outlook.
UPDATE
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.8066.
In the wake of a speech made by Bank of England policymaker Martin Weale, the Pound has surged against most of its major peers. The hawkish speech addressed improvement in unemployment as a motivation for raising the benchmark interest rate. Weale argued that improvement in unemployment could lead to inflationary pressures, and the BoE should anticipate this with preventative measures by hiking rates.
The Canadian Dollar continues to struggle against the oil bear market and the general declination in commodities. ‘It is clear the positive momentum seen in this sector over the last 12 months has faded,’ said Jim Lennon, senior commodities consultant at Macquarie Group Ltd., in a report. ‘Output from the world’s factories, mines and power stations shrank in August, a poor backdrop for commodities demand.’
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5518,
Canadian Dollar,,US Dollar,0.8820,
Canadian Dollar,,Euro,0.6920,
Canadian Dollar,,Australian Dollar,1.0050,
Canadian Dollar,,New Zealand Dollar,1.1230,
US Dollar,,Canadian Dollar ,1.1329,
Pound Sterling,,Canadian Dollar,1.8108,
Euro,,Canadian Dollar,1.4442,
Australian Dollar,,Canadian Dollar,0.9943,
New Zealand Dollar,,Canadian Dollar,0.8882,
[/table]
