The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed by around 0.24% on Tuesday afternoon.
Despite the fact that British Gross Domestic Product registered the slowest pace of growth since 2012, the Pound strengthened versus many of its most traded currency competitors. The appreciation can be attributed to traders fearing that the recent declination, caused by political uncertainties as the general election draws closer, were overdone.
The Canadian Dollar, conversely, softened versus the majority of its most traded currency competitors despite a positive speech from Bank of Canada (BOC) Governor Stephen Poloz. The depreciation is likely to be the result of tracking US Dollar losses amid yet more disappointing domestic data.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8456.
Pound Sterling (GBP) Exchange Rate Edges Higher despite Sluggish Growth
On the year, UK Gross Domestic Product showed first-quarter growth of 2.4%; failing to meet with the median market forecast of a 2.6% increase. The quarterly GDP hit 0.3% instead of the market consensus of 0.5%.
The Pound’s appreciation can be linked to both a weakening US Dollar and concern that the fallout from election jitters was overdone. ‘Pound strength in large part has been a function of Dollar weakness,’ said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. ‘Meanwhile, the expectations for Pound fallout from the election are on the decline. GDP data is also considered somewhat backward-looking.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has dropped to a low of 1.8371 today.
Canadian Dollar (CAD) Exchange Rate Softens on US Dollar Weakness
Whilst the cooling US Dollar has contributed to Sterling gains, the ‘Loonie’ (CAD) softened as it tracks losses. This has overshadowed higher oil prices and positive comments from BOC Governor Stephen Poloz.
‘Outside of the energy sector, other areas of the economy appear to be doing well,’ Poloz, 59, said in comments to the House of Commons finance committee in Ottawa on Tuesday. ‘The segments of non-energy exports that we expected to lead the recovery are doing so, and we expect this trend to be buttressed by stronger US growth and the lower Canadian Dollar.’
‘The main risk to our outlook is the size and duration of the negative impact of the oil shock, weighed against the positive forces that are building in the non-energy sector,’ Poloz said. ‘Our outlook is for the positives to begin to reassert themselves during the second quarter, and to do so clearly in the second half of the year. The interest rate cut in January and the lower Canadian Dollar are working to speed up the transition.’
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Gains
Given the absence of domestic data to curb the trend, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold gains for the remainder of Tuesday’s European session. Wednesday could see heightened GBP/CAD volatility with UK sales data and Canadian commodity price data due for publication.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate reached a high of 1.8489 today.
