Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Jumps 1.3%
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced to a high of 1.8624 in the wake of the Bank of Canada’s (BOC) interest rate decision.
The central bank has left interest rates on hold since 2010 so the decision to cut the benchmark rate to 0.75% from 1.0% came as something of a surprise.
The BOC also cut its growth forecasts for the first half of 2015, further undermining demand for the ‘Loonie’.
In the hours following the decision CAD dropped over 1% against the Euro and ‘Aussie’ as well as approaching a six-year low against the US Dollar.
GBP/CAD Exchange Rate Softer before BoC Decision
Bets that the price of crude oil could drop to as low as $25 a barrel, in conjunction with poor Canadian data, saw the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate surge on Tuesday.
However, the ‘Loonie’ recovered losses against the Pound ahead of the Bank of Canada’s interest rate decision as the Bank of England’s meeting minutes proved to be more dovish than anticipated.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trading in the region of 1.8295.
Earlier…
GBP/CAD Exchange Rate Jumps to 1.8286
As trading continued the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate extended gains as Canada’s Manufacturing Shipments report registered a surprisingly steep decline.
Shipments were expected to have fallen by -0.7% in November, month-on-month, but they actually dropped by -1.4%.
October’s figure was negatively revised to -1.1%.
The GBP/CAD pairing advanced by 1.3% to trade in the region of 1.8276.
Earlier…
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed by over 0.5% on Tuesday as the International Monetary Fund’s (IMF) decision to cut its global growth forecasts saw the price of oil fall.
GBP/CAD Exchange Rate Climbs on Commodity Weakness
Before the IMF figures were published, the Canadian Dollar had posted modest gains against both the US Dollar and the Pound as investors dwelt on the upcoming Bank of Canada (BOC) policy decision.
Strategist Mark Chandler observed; ‘The bank is poised to deliver its rate decision and revised forecasts with tectonic shifts in some of its underlying assumptions, notably a 4.5% decline in the value of the Canadian Dollar and a 40% drop in oil prices since forecasts were prepared in October.’
As oil is Canada’s main commodity, the ‘Loonie’ fell against several of its most-traded currency rivals in the wake of the IMF’s report.
The institution slashed its global growth projection for 2015 from 3.8% to 3.5% and downgraded its expansion estimate for 2016.
The revision to the 2015 figure was the most extensive since 2012.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate achieved a high of 1.8143
While the US received a positively revised growth forecast, the Eurozone, China, Japan and Latin America all had their GDP expectations negatively adjusted.
The IMF’s decision saw analyst Ole Sloth Hansen comment; ‘The IMF revision is part of the general growth downgrade we are currently seeing. It does indicate that we are going to struggle getting out of the supply glut from increased demand. That leaves the focus squarely on what happens to supply.’
Oliver Blanchard of the IMF said of the revisions; ‘The world economy is facing strong and complex cross currents. On the one hand, major economies are benefiting from the decline in the price of oil. On the other, in many parts of the world, lower long-run prospects adversely affect demand, resulting in a strong undertow.’
After the IMF report was published, oil fell for a second day, with futures slipping by 1.3%.
Not even better-than-expected fourth quarter growth data for China helped to slow oil’s declines.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell to a low of 1.8008
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Fluctuate on BOC Decision, Jobs Data
Today’s Canadian Manufacturing Shipments report could inspire some further GBP/CAD exchange rate movement.
The data is expected to record a month-on-month decline of -0.5% in November following October’s -0.6% drop.
Shifts in the commodity market will also have an impact on the pairing.
Of course, investors with an interest in the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate will be focusing on tomorrow’s UK employment data and the Bank of Canada’s interest rate decision.
If the UK’s unemployment and average earnings figures show the improvement expected by economists, the Pound is likely to rally against the majority of its currency counterparts.
Similarly, a dovish statement from the BOC would give the GBP/CAD pairing the fuel it needs to continue its uptrend.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8138
The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is currently trading in the region of 0.5507
The US Dollar to Canadian Dollar (USD/CAD) exchange rate is currently trending in the region of 1.1968
The Canadian Dollar to US Dollar (CAD/USD) exchange rate is currently trending in the region of 0.8354
