The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate remained bullish in Tuesday’s trading ahead of the Bank of Canada (BOC) interest rate announcement on Wednesday.
Another factor that could offer significant Pound to Canadian Dollar (GBP/CAD) exchange rate movement will be Friday’s Canadian Net Change in Employment and Unemployment Rate stats. The present prediction is that unemployment levels will rise in November from 6.5% to 6.6%–a development that would be likely to see the ‘Loonie’ exchange rate depreciate.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate made modest gains on Tuesday as oil currencies continued to suffer the consequences of the recent OPEC meeting.
The Bank of Canada will announce its interest rate decision on Wednesday–an event that could see the Canadian commodity currency fluctuate. Thursday will see the release of the Ivey Purchasing Managers Index which is forecast to rise from 51.2 to 52.8.
However, Canadian Unemployment Rate and Change in Non-Farm Payrolls figures are out on Friday which could be a highly influential development for the Canadian Dollar.
Bank of Canada Interest Rate Announcement could cause ‘Loonie’ Interest Rate Fluctuations
In Monday’s session… The Pound to Canadian Dollar (GBP/CAD) exchange rate softened after Canada’s Manufacturing Purchasing Managers Index (PMI) release. However, with the Bank of Canada (BOC) interest rate meeting on Wednesday the GBP/CAD currency pair could be in for an interesting week.
Forex strategist Shaun Osbourne commented: ‘Things will get more interesting in the coming days with the BOC meeting on Wednesday and dual US and Canadian Intentional Trade and Employment Reports on Friday.’ The Bank of Canada is expected to keep rates at 1.0%, however any hawkish remarks could bolster the Canadian commodity currency.
Osbourne continued: ‘Regarding the BOC, we expect the communique to strike a neutral bias, balancing the detrimental impact of lower crude oil prices in Canadian exports and fixed investments with its beneficial effect on consumers both sides of the border, while also noting the impact of lower energy prices on already subdued inflation dynamics globally, and highlighting the potential dampening effect on Canadian inflation as week.’
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Could Tumble after Canadian Manufacturing Data
Earlier in the session… The Pound to Canadian Dollar (GBP/CAD) exchange rate continued to be bullish in the market in Monday’s European session, despite a robust Canadian Manufacturing Purchasing Managers Index (PMI).
The November RBC figure remained at 55.3 which showed the Canadian manufacturing sector was maintaining its strength in the last few months of 2014.
RBC chief economist Craig Wright commented: ‘The latest RBC PMI data shows continued strength in the manufacturing sector led by increases in output and employment. New export orders recorded a strong jump in the month, pointing to continued support from a stronger US economy and a more competitive Canadian Dollar. This trend is expected to continue with additional support for the manufacturing sector coming from lower energy and transportation costs.’
Earlier in the session… The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate extended its gains on Monday as UK Manufacturing PMI continued to bolster the British currency.
Senior Markit economist Rob Dobson commented: ‘In the lead-up to the chancellor’s Autumn statement, the November PMI survey showd the UK manufacturing sector continuing its solid expansion. Despite easing from the stellar pace set in the first half of the year, growth is still coming from a broad base that will aid its sustainability.’
The Pound to Canadian Dollar (GBP/CAD) exchange rate continued to advance after the price of oil slumped to a fresh four-year low. The price of West Texas Intermediate dipped below $65 a barrel, placing pressure on commodity currencies such as the Canadian Dollar.
OPEC Meeting Pressures Canadian Dollar to Pound (CAD/GBP) Exchange Rate Lower
The GBP/CAD currency pair recorded gains last week in the run-up to the Organisation of the Petroleum Exporting Countries (OPEC) meeting, which saw members discuss the possibility of cutting oil production. At present, a global surplus has pushed oil prices lower—a result of increasing shale oil output in the US and reduced demand from large economies in the face of a global slowdown.
However, the OPEC meeting resulted in no change for the petroleum exporting countries, with production set to remain at the current level in the hope that the market will even itself out over time. However, some are not so optimistic and expect the competition between oil suppliers to become heated.
Senior market analyst Phil Flynn commented: ‘It’s clear that a production war is on and it will be survival of the fittest.’
Michael McCarthy also suggests that the tense battle between shale and crude oil suppliers could continue. McCarthy stated: ‘It’s likely that this pressure will remain on prices until there are signs of some shutdowns.’ Furthermore, McCarthy believes that the decision by OPEC to continue with high levels of production was ‘aimed at shaking out high-cost producers, particularly shale.’
UK Manufacturing Sector offers Pound Sterling (GBP) Exchange Rate Support
Meanwhile, UK figures printed favourably in the early part of Monday’s European session. Markit’s UK Manufacturing Purchasing Managers Index (PMI) was expected to soften from 53.2 to 53.0 in November; however the ecostat actually rose to 53.5—further into growth territory.
The Markit report read: ‘The upturn in the UK manufacturing sector continued in November. Although the rate of growth in recent months has remained weaker than in the opening half of the year, the latest survey month nonetheless saw further solid expansions of output, new orders and employment.’
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
Canada will publish its own Manufacturing PMI later, and the data could impact the ‘Loonie’ exchange rate significantly. The ecostat resided at 55.3 in November and any further progression into the over 50.0 expansion territory could see the GBP/CAD exchange rate retrace its earlier advancement.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is presently residing at 1.7918, while the CAD/GBP currency pair trades in the region of 0.5586.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Canadian Dollar , 1.7941,
US Dollar,,Canadian Dollar , 1.1411,
Euro,,Canadian Dollar , 1.4225,
Australian Dollar,,Canadian Dollar , 0.9681,
New Zealand Dollar,,Canadian Dollar , 0.8961,
[/table]
