The Pound held onto earlier gains against the Canadian Dollar exchange rate (GBP/CAD) on Monday as it continued to find support from a better than forecast Manufacturing Purchasing Managers Index report.
Further gains for the GBP/CAD exchange rate were likely to be restrained however following the publication of positive data out of Canada.
According to the Royal Bank of Canada’s PMI report, manufacturing activity increased to its strongest level in close to a year after being buoyed by increased demand in new orders from the USA and UK. The PMI increased to a seasonally adjusted reading of 55.3, higher than the 53.5 figure seen in September. The figure was the highest recorded since November 2013, and to add to the sense of optimism the forward-looking new orders index increased from 53.7 to 56.4.
In a PMI report, ay result above 50 indicates expansion whilst a number below indicates contraction.
‘We saw a strong uptick in Canada’s manufacturing business conditions in October driven by new order growth. Despite the challenges we are seeing in the European and emerging markets, the continued recovery of the US economy should continue to support Canadian exports going forward,’ said senior vice-president and chief economist at RBC Craig Wright.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
Sterling is forecast to remain supported against the Canadian Dollar and other major peers until Thursday’s Bank of England policy meeting. Separate PMI reports are expected to show that activity in the UK’s construction and services sectors also picked up in October, reducing concerns over a slowdown.
‘Broadly the UK story remains reasonably constructive. If we are going to see evidence of continued reasonable growth expectations and the two PMIs to come will be hugely significant, if those represent anything like the topside risk we have seen in manufacturing, then Sterling should continue relatively well,’ said Jeremy Stretch, head of forex strategy at Canadian Imperial Bank of Commerce.
Analysts are forecasting that the BoE policy makers will choose to leave interest rates unchanged at the record low level of 0.5% and leave its monthly quantitative easing programme unchanged at £375 billion.
The Canadian Dollar could experience further movement on Tuesday if the latest Canadian Balance of Trade report shows a narrowing in the nation’s trade deficit. Economists are expecting the deficit to narrow from $0.61 billion to $0.3 billion.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5533 ,
Canadian Dollar,,US Dollar,0.8843 ,
Canadian Dollar,,Euro,0.7075 ,
Canadian Dollar,,Australian Dollar,1,0152,
Canadian Dollar,,New Zealand Dollar,1.1439 ,
US Dollar,,Canadian Dollar,1.1306 ,
Pound Sterling,,Canadian Dollar,1.8072 ,
Euro,,Canadian Dollar,1.4135 ,
Australian Dollar,,Canadian Dollar,0.9853 ,
New Zealand Dollar,,Canadian Dollar,0.9741 ,
[/table]
