The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell for a second day on Thursday as the ‘Loonie’ found support from reduced expectations for an interest rate cut by the Central Bank of Canada.
The GBP/CAD Exchange Rate hit a session low of 1.923
Sterling saw little in the way of support from domestic data which showed that the UK economy expanded by a seasonally adjusted 0.5% in the final quarter of 2014. The figure had been forecast by economists and was unchanged from an initial estimate.
A separate report also published by the London based Office for National Statistics (ONS), showed that total business investment fell in the fourth quarter of last year. The drop came as a fall in oil prices forced North Sea oil extractors to cut back on infrastructure spending. The data showed that business investment fell by 1.4%.
“Given the recent steep fall in oil prices, it might be expected that investment by the oil extraction industry might also fall, as oil production becomes less profitable,” the ONS said.
After the data releases economists said that the UK economy is unbalanced as it is too reliant on consumer spending to increase growth. They added that the uncertainty caused by May’s general election could weigh on the economy.
The Canadian Dollar meanwhile was continuing to receive support from a weakened US Dollar and comments made by Bank of Canada Governor Stephen Poloz earlier in the week. The governor said that last month’s surprise rate cut has given the central bank time to figure out how best to put the nation’s economy back on track as it continues to suffer from weak oil prices.
The ‘Loonie’ was also supported by an improvement in the commodity’s price on Wednesday. Prices softened again on Thursday but due to the price remaining above $50 per barrel, the currency continued to receive some support.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The Pound could regain some lost ground later in the session if Canadian inflation data comes in worse than forecast.
Economists are expecting the monthly rate to have improved from the previous figure of -0.7% to -0.4%. The annual rate is expected to dip from 1.5% to 0.7%.
Future Currency Forecast:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Canadian Dollar,1.9292 ,
Pound Sterling,,Euro,1.3659 ,
Canadian Dollar,,Pound Sterling,0.5178 ,
Canadian Dollar,,US Dollar,0.8035 ,
[/table]
