The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending lower ahead of UK Industrial and Manufacturing Production figures, as well as the highly influential Canadian Net Change in Employment and Unemployment Rate stats.
Earlier… The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate continued to trend lower during Thursday’s session after the Bank of England (BoE) announced it would maintain its current 0.50% interest rate benchmark.
Furthermore, the Pound fell to a 17-month low against the US Dollar (GBP/USD) as speculation mounts that the central bank will refrain from hiking interest rates until 2016.
Forex expert Steven Saywell commented: ‘The market has gone too far pushing the first rate hike out to early 2016. We don’t write off a rate hike in 2015 from the Bank of England. Sterling to outperform the Euro or Swiss Franc is a great trade for this year.’
Earlier…
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate recorded losses early in Thursday’s European session as investors awaited the highly influential Bank of England (BoE) interest rate decision.
The central bank is expected to leave interest rates on hold in January and most likely until after May’s UK general election as political uncertainty pressures the Pound. 2014 saw BoE Governor Mark Carney hype the possibility of interest rate increases before Christmas—an event that saw the Pound Sterling exchange rate rocket.
Worsening UK Data Mounts, Pound Sterling (GBP) Exchange Rate Weakens
However, a string of weakening figures later, and the central banker’s excitement for an increase in borrowing costs has calmed down. Two hawkish Monetary Policy Committee (MPC) members, Ian McCafferty and Martin Weale have voted in favour in the last four meetings for the immediate increase in interest rates.
However, the other seven members, including Carney, have voted against. In recent months inflation in the UK has lowered—a result that can be partially accredited to falling oil prices. However, the UK’s overall economic recovery has been faltering with patchy figures emerging and pressuring the Pound Sterling exchange rate lower.
Industry expert Samuel Tombs commented: ‘Heightened uncertainty regarding how weak inflation will be in 2015 and signs that the recovery has become less broad-based are likely to mean that the MPC keeps interest rates on hold at January’s meeting and throughout the first half of 2015.’
Wage growth has been one area of the British recovery that has struggled in recent years. However, falling inflation and a small increase in earnings inspired hope that employment could begin to see some positive changes.
Tombs continued: ‘But signs that wage growth is starting to strengthen and labour market slack is continuing to decline suggest that a move to raise Bank Rate before the end of this year remains on the cards.’
Meanwhile, the Canadian Dollar could experience movement later in Thursday’s session with the release of the Canadian New Housing Price Index. The October figure resided at 1.6% on the year.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
Friday is shaping up to be an interesting day for Canadian Dollar trading with Canadian Net Change in Employment and Unemployment Rate ecostats scheduled for publication. Unemployment Rate figures are expected to remain at 6.6% in December—a development that could offer the ‘Loonie’ some stability against other majors.
The UK will also produce some influential data in the form of Industrial Production, Manufacturing Production and Trade Balance figures.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is presently trending in the region of 1.7794 with a market movement of -0.39%. The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is hovering at 0.5624.
