Sterling (GBP) Stuck in Bearish Trend Awaiting Employment Data, Weak ‘Loonie’ (CAD) Causes Limited Fluctuation in GBP/CAD Exchange Rate
Little has changed for the GBP/CAD exchange rate overnight, although the further Yuan devaluation by the People’s Bank of China (PBoC) could stand to pull the Canadian Dollar (CAD) down again. Optimism does not appear to be high for the Pound (GBP), however, in spite of expectations that today’s Unemployment Rate and Employment Change figures will be seeing improvement.
At present, the GBP/CAD exchange rate is trending in the range of 2.0377.
Earlier…
Oil price fluctuations, in response to the decision by the People’s Bank of China (PBoC) to depreciate the value of the Yuan (CNY), helped bolster the GBP/CAD exchange rate today as the Canadian Dollar (CAD) entered another downtrend.
Crude Oil Prices Made Resurgence at Beginning of Week to Benefit ‘Loonie’ (CAD), GBP/CAD Exchange Rate Fell Further
In spite of limited economic data releases on Monday, the GBP/CAD exchange rate saw some major movement as the ‘Loonie’ (CAD) rebounded on an increased crude oil price. Brent oil rose in value by 3.7% at the start of the week in its greatest rally since May. A potential improvement amidst the continuing commodity squeeze, this drew some interest back to the risk-sensitive currency and drove the GBP/CAD pairing into a slump to hit 2.0275.
The Pound (GBP), meanwhile, remained mostly overshadowed by the results of ‘Super Thursday’ and the disappointed hopes of an interest rate rise before the end of the year.
Commodity Currencies Plunge as China Devalues Yuan (CNY), GBP/CAD Exchange Rate Buoyant as Canadian Dollar (CAD) Resumes Downtrend
The reprieve for the struggling Canadian Dollar was not to last, however, as the People’s Bank of China (PBoC) last night revealed a significant depreciation of the Yuan (CNY), which took its value down nearly 2% against the ‘Buck’ (USD). Commodity currencies and those of the Australasian region were all badly damaged by the announcement, given the importance Chinese imports play in the global market. With decreased buying power added to lowering demand, China’s ability to import goods, such as oil, will now naturally decrease. Consequently the GBP/CAD exchange rate was swiftly boosted to a daily peak of 2.0356.
Canada’s Housing Starts for July, a measure based on the commencement of construction on housing units, did not offer any particular support for the ‘Loonie’ today. Falling lower than expected on last month’s figure of 202,300 to reach 193,000 this provided yet another indication that the Canadian recession is well underway.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast: Good Chance for Sterling Rally on Employment Reports, ‘Loonie’ Softness to Continue
There is little hope for a ‘Loonie’ rally over the rest of the week, unless either Canada’s New Housing Price Index or month-on-month Manufacturing Sales manage to impress pundits and pull off a surprise revival. As the Chinese markets begin to stabilise in the coming days, however, the long term effects of today’s Yuan devaluation could prove to be ultimately hawkish for global commodities, and thus the Canadian Dollar.
Movement is likely to originate from upcoming UK data in the following days, as Employment Change and Unemployment rate may stand to enable a true rally for Sterling with the production of positive numbers. These could prove to be especially important as it has been suggested that the Bank of England (BoE) Monetary Policy Committee (MPC) will be looking to employment figures in particular when considering future votes on an interest rate hike. While the awaited rise remains unlikely to be achieved before the end of the year, any indications that support the chance of it happening sooner rather than later in 2016 will make the Pound more attractive to traders.
Current GBP, CAD Exchange Rates
At time of writing the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is moving positively in the range of 2.0386, with the Canadian Dollar to Pound Sterling (CAD/GBP) pairing trending down at 0.4899.
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