The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate began trending lower on Thursday after the UK trade deficit widened more than forecast, UK Halifax House Prices fell and investors eagerly awaited the Bank of England’s (BoE) interest rate decision.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
On the year, the Halifax House Price figure fell from 8.3% to 8.1% in the three months through March, below the 8.2% prediction. However, the month of March showed a 0.4% rebound—much more favourable than the 0.1% forecast.
Halifax housing market economist Martin Ellis stated: ‘The recent return to real earnings growth for the first time in several years, very low mortgage rates and last December’s stamp duty changes are supporting housing demand. The rising level of house prices in relation to earnings should, however, curb house price growth and activity.’
Next up was the unfavourable UK Trade Balance ecostat which showed a much wider-than-forecast deficit emerge. The Balance of Trade number hit £-2.859B from the former £-0.616B. The February exports figure recorded a £900M fall at £23.2bn which was the lowest level for four years.
The Office of National Statistics (ONS) commented: ‘The widening of the trade deficit between January and February 2015 mainly reflects a fall in exports of goods sold to non-EU countries.’
Furthermore, the figure pressured the Pound Sterling exchange rate lower against a host of other foreign exchange majors—the strong British currency has been accredited as one of the problems for exports.
Economist Paul Hollingsworth stated: ‘February’s trade deficit came in worse than expected and will have re-ignited fears that the strong Pound and weakness in demand in the Eurozone is acting as a straightjacket on exporters.’
Canadian Dollar to Pound Sterling (CAD/GBP) Exchange Rate Forecast
Meanwhile, the Canadian Dollar could be in for some movement on both Thursday and Friday with the release of influential data still to come. The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate could continue its rally if Canadian Building Permits and New Housing Price Index figures print favourably as forecast.
However, Friday will be a major mover for the CAD/GBP currency pair as the Canadian Dollar exchange rate fluctuates on the release of the highly influential Canadian Net Change in Employment, Unemployment Rate and Participation Rate ecostats.
Canada’s Unemployment Rate is expected to hold steady at 6.8% in March—however, any surprise decline in joblessness could boost the Canadian Dollar dramatically.
Furthermore, the ‘Loonie’ exchange rate is extremely sensitive to any changes in the price of oil as crude is Canada’s biggest export and commodity.
Oil Prices Recover by 2.0% on Thursday and Support the Canadian Dollar (CAD) Exchange Rate
Thursday has seen oil prices rally by 2% on Thursday, after slumping by 6% on account of higher-than-forecast US crude oil inventories and record high Saudi Arabia oil production levels.
Analysts at Societe Generale explained: ‘Total US crude stocks continued to fly far above five-year highs, setting new records every week.’
Traders suggest that the oil sell-off had been too extensive and therefore rebalancing was likely to occur.
Oil and commodities analyst at Commerzbank, Carsten Fritsch, stated: ‘Brent fell to the bottom of its $55 to $60 trading range yesterday and has consequently turned higher. Huge volatility has been the name of the game in the past few days.’
The Bank of England (BoE) interest rate announcement scheduled for later in Thursday’s trading could influence the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate, although it’s extremely unlikely the central bank will make any adjustment to monetary policy at this point.
Furthermore, the UK’s Industrial Production, Manufacturing Production and NIESR Gross Domestic Product Estimate will all be out on Friday, which could make it a choppy day for Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate trading alongside such influential Canadian labour market data.
The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is trading at 0.5388. The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending in the region of 1.8577.
