The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate declined by around -0.18% on Friday morning.
After British data showed the 12-month inflation expectation was cut, the Pound softened against most of its major peers. The declination has been somewhat slowed, however, after Bank of England (BoE) policymakers stated that deflation was only a temporary issue.
The Canadian Dollar, meanwhile, strengthened versus the majority of its major peers after crude prices rose. Additional ‘Loonie’ (CAD) appreciation can be attributed to Thursday’s positive domestic data results.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8998.
Pound Sterling (GBP) Exchange Rate Softens on Inflation Expectation
British data printed disappointingly, but not unexpectedly, on Friday morning. Inflation expectations over the next 12-months dropped from 2.5% to 1.9% in February, the lowest level in over thirteen years.
However, over the past few weeks several policymakers have stated that they believe deflation to be temporary and the result of low crude prices. ‘The MPC’s decision to stand pat today … looks set to repeated over the next few months while inflation hovers near zero,’ said Samuel Tombs, economist at Capital Economics. ‘But by the summer, it should be clear that the UK’s deflation is neither pernicious nor long-lasting.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate dropped to a low today of 1.8951.
Canadian Dollar (CAD) Exchange Rate Strengthens as Oil Prices Gain
As a commodity-correlated currency that is particularly sensitive to fluctuations in the oil market, the Canadian Dollar strengthened on Friday after crude prices rose amid difficulties in Libya and after Canadian exports by train declined.
A huge oil train derailment in America also kept crude prices rising. Galena City Administrator Mark Moran told an Iowa newspaper that eight tankers had left the track. ‘Two of those were still upright. The other six were not,’ he said.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Losses
Given that British data printed disappointingly, and with crude prices continuing to rise, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold losses for the remainder of Friday’s trade. There is, however, the potential for volatility with Canadian Building Permits data due for publication on Friday afternoon.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed to a high today of 1.9041.
