The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending within a narrow range on Friday morning.
As traders await economic data pertaining to both the UK and Canada, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is unlikely to experience much in the way of volatility. With that being said, fluctuations in the oil marker will have an effect on the commodity-correlated Canadian Dollar.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9242.
Yesterday…
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate softened by around -0.43% on Thursday afternoon.
Although Bank of England (BoE) Governor Mark Carney warned that British inflation is likely to dip into negative territory, the Pound strengthened versus many of its major peers. This can be attributed to the BoE’s confidence that inflation will reach target eventually and its hints that the cash rate will be increased sooner-than-anticipated.
The Canadian Dollar, meanwhile, strengthened versus many of its major rivals as a result of oil prices rebounding. A weaker US Dollar caused oil prices to advance beyond $50 a barrel, although most experts believe the gains will be short-lived. Relatively positive Canadian data also aided the ‘Loonie’ uptrend.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9164.
Pound Sterling (GBP) Exchange Rate Gains on BoE Inflation Report
The likelihood that UK inflation will fall into negative territory was expected, and therefore priced-in by traders. However, hints that the BoE could raise rates before currently projected were unexpected; causing the Pound to appreciated versus many of its major rivals.
‘The market understands in general what the MPC is trying to do,’ Carney said. ‘It’s pretty clear … that the most likely next move in monetary policy is an increase in interest rates.’
In a letter to Chancellor George Osborne, Mark Carney stated that the UK was not in a state of deflation. ‘A temporary period of falling prices driven by large adjustments in a few specific components of the CPI is a fundamentally distinct phenomenon from ‘deflation’, which is characterised by persistent and generalised declines in prices’ he wrote. ‘The UK is not experiencing ‘deflation’,’ he added.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate dropped to a low of 1.9105 today.
Canadian Dollar (CAD) Strengthens on Oil Prices
After yet more US data printed disappointingly, the softer ‘Buck’ (USD) caused oil prices to rebound.
As a currency highly sensitive to fluctuations in oil prices, the ‘Loonie’ advanced as a result.
‘The Dollar is weaker against all the commodities at the moment,’ said Michael Hewson, chief analyst at CMC Markets. ‘We saw a heavy selloff in commodities yesterday and I think that’s why we’re getting a little bit of a rebound in oil prices on the back of that.’
Canadian data also printed reasonably positively on Thursday. Of most significance, in terms of its potential to provoke movement, was the New Housing Price Index which held at 1.7% in January.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Losses
Unless there is a significant change in oil prices, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold losses for the remainder of Thursday. However, there is the possibility for GBP/CAD volatility on Friday with British construction output data and Canadian manufacturing shipments due for publication.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate reached a high today of 1.9319.
