The Pound to Canadian Dollar (GBP/CAD) exchange rate increased to a more than two-week high on Thursday as poor manufacturing data and risk aversion sent the ‘Loonie’ tumbling.
Data released by the Ottawa based Statistics Canada showed that factory sales in the North American nation tumbled from a record high in August and fell by its sharpest level in more than five years as demand for cars declined.
Sales dropped by -3.3% to C$52.1 billion, the fastest decline recorded since May 2009, exceeding all economist forecasts for a fall of 2%. The report also showed that the sales of motor vehicles fell by 12% a sharp drop from the preceding month’s rise of 13%.
Also sending the Canadian currency lower are concerns over the health of the wider global economy and tumbling oil prices. The ‘Loonie’ has been dragged down as it followed anything crude oil related downwards. The value of crude oil, which is Canada’s biggest export, fell below the key $80 per barrel level as production continued to exceed waning demand.
‘Disinflationary pressures warn of more slack in the global economic outlook than expected, complicated by Ebola and geopolitical risks. Soft US data yesterday, including disappointing retail sales served to fuel fears,’ said Camilla Sutton, cheif FX strategist and managing director at Scotiabank.
The Pound was continuing to receive support from comments made by Bank of England policy maker Martin Weale who said that the bank should ignore the soft inflation report released on Tuesday and instead focus on growth data. He added that Wednesday’s better than forecast unemployment figures would lead to a quickening pace in wage growth, a major factor highlighted by BoE Governor Mark Carney regarding an interest rate rise.
“The tightening of the labor market means that, instead of waiting to see wage growth pick up, I think it is appropriate to anticipate that wage growth,” Weale said. “The margin of spare capacity is shrinking rapidly and all logic suggests that ought to lead to an increase in inflationary pressures over the two to three-year horizon which concerns the Committee.”
Pound to Canadian Dollar Exchange Rate Forecast
The Pound is forecast to make further gains against the weakened Canadian Dollar as demand for safer assets looks set to remain for some time.
With weakness in the Eurozone and concerns over the global economy dominating the ‘Loonie’ and other riskier assets are likely to remain under pressure.
UPDATE
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.8083.
With nothing in terms of domestic data to provoke volatility, the Pound has remained reasonably static against the majority of its most traded currency peers. This is in spite of an extremely dovish speech given by Bank of England Chief Economist Andy Haldane, who stated that he would not vote for a rate increase. He argued that the slow pace of global economic growth and the fall in British inflation has made up his mind for him.
Meanwhile, the Canadian Dollar has remained relatively unmoved as traders await the inflation data due for publication later on Friday.
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,0.5508 ,
Canadian Dollar,,US Dollar,0.8817 ,
Canadian Dollar,,Euro,0.6908 ,
Canadian Dollar,,Australian Dollar,1.0128,
Canadian Dollar,,New Zealand Dollar,1.1114 ,
US Dollar,,Canadian Dollar,1.1333 ,
Pound Sterling,,Canadian Dollar,1.8140 ,
Euro,,Canadian Dollar,1.4478 ,
Australian Dollar,,Canadian Dollar,0.9867 ,
New Zealand Dollar,,Canadian Dollar,0.8979 ,
[/table]
