The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trading in a narrow range toward the end of Tuesday’s trading ahead of Wednesday’s UK figures and Bank of Canada (BOC) rate decision.
The GBP/CAD currency pair is in for an interesting day on Wednesday and any statements from the BOC are likely to play a huge part in any ‘Loonie’ exchange rate movement. Furthermore, any development in oil prices could also enable fluctuations.
Earlier in the session… The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has been bullish in the market as softer oil prices weigh on the ‘Loonie’.
Citgroup stated: ‘The era of $100 [a barrel] oil is over. Oil prices appear to be falling rapdily to–if they haven’t already–reached production costs.’
The recent Organisation of the Petroleum Exporting Countries (OPEC) meeting saw members agree to continue on with current levels of production despite falling prices.
Barclays commented: ‘It [oil prices] will have to endure a volatile adjustment period while non-OPEC supply, demand and even some OPEC producers adjust.’
Markit’s UK Construction Data Pulls Pound Exchange Rate (GBP) Lower
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has remained in a tight range after Markit’s UK Construction Purchasing Managers Index (PMI) printed unfavourably.
Construction sector growth shrank in November from 61.4 to 59.4—the slowest pace of growth since October 2013. Economists’ had expected a softer fall to 61.0.
UK Construction at Slowest Pace in Over a Year – Pound Pressured Lower
Markit economist Tim Moore commented: ‘The construction sector remains a strong growth engine within the UK economy, but momentum has undoubtedly cooled since the summer. A less favourable overall economic newsflow was cited as the key factor dampening otherwise buoyant demand patterns across the UK construction sector.’
However, in the run up to the UK general election in May, it appears the British economic recovery could have a bumpy ride ahead. With political party UKIP winning two seats in parliament in recent months, the door for drastic political change appears to be wide open.
Moore continued: ‘Looking ahead, construction firms are optimistic overall about their growth prospects for the next 12 months, reflecting strong confidence that positive spending patterns will continue. However, some construction companies noted that uncertainties ahead of next year’s general election had weighed on business confidence and influenced clients’ willingness to commit to new projects.’
Oil Tumbles to Four-Year Low, Pulling Canadian Dollar Exchange Rate Down with it
Meanwhile, the Canadian Dollar has tumbled in recent weeks as the price of oil reaches four-year lows. The Bank of Canada (BOC) is due to announce its latest interest rate decision on Wednesday—an event that could see the ‘Loonie’ exchange rate move significantly.
The Bank of Canada isn’t expected to alter its cash rate from the 1.0% benchmark held for the past four years. However, as economies the world over draw closer to raising interest rates for the first time since the onset of the global financial crisis, speculation over the BOC’s timeframe is rife.
With the interest rate announcement likely to be accompanied by a statement, economists and investors are hypothesising about the outcome of Wednesday’s decision.
Strategist Camilla Sutton commented: ‘Lower oil prices are a negative development for the economic backdrop and CAD and will play into the tone of the BOC’s statement.’
With inflation hovering above target, the BOC has been under pressure to move toward hiking rates. However, a Reuters poll has forecast that increases to borrowing costs won’t occur in May as some predicted but will materialise toward the end of 2015.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
Wednesday will see the release of UK Markit Composite and Services Purchasing Managers Indexes, as well as UK Official Cash Reserves figures. Moreover, the BOC rate announcement will occur later in the day which could cause major Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate movement.
However, Thursday will see the Bank of England (BoE) announce its own interest rate decision—an event that has seen major currency movement in the past.
The GBP/CAD exchange rate is presently trending in the region of 1.7828, while the Canadian Dollar to Pound Sterling (CAD/GBP) currency pair resides at 0.5615.
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 , 1.7849,
US Dollar,,Canadian Dollar , 1.1359,
Euro,,Canadian Dollar , 1.4128,
Australian Dollar,,Canadian Dollar , 0.6812,
New Zealand Dollar,,Canadian Dollar , 0.8910,
[/table]
