The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within a narrow range on Wednesday afternoon.
After the Queen’s Speech confirmed the Conservative promise to hold an in/out referendum on Britain’s membership in the European Union, the Pound softened versus many of its closest peers. The depreciation has been slow and steady, however, as traders look ahead to Thursday’s growth data.
The Canadian Dollar, meanwhile, softened versus its currency competitors despite the fact that the Bank of Canada (BOC) avoided cutting the benchmark interest rate. The ‘Loonie’ (CAD) declination can be linked to a combination of sliding oil prices and damp market sentiment.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9103.
Pound Sterling (GBP) Exchange Rate Forecast to Trend within Tight Range against the Canadian Dollar ahead of UK Growth Data
As traders prepare for UK growth data, due for publication on Thursday, the Pound is generally edging lower. The depreciation has been slow, however, thanks to speculation that British Gross Domestic Product will be positively revised.
Weighing heavily on demand for the British asset are fears regarding the EU referendum. Given the volatility caused by political uncertainty during the Scottish referendum and general election, traders fear that the EU referendum will see a long period of cautious trade ahead of the results. Many analysts are hoping for a sooner-than-expected referendum in order to avoid the declination caused by political uncertainties.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has fallen to a low of 1.9046 today.
Canadian Dollar (CAD) Exchange Rate Forecast to Trend within a Narrow Range against the Pound despite BOC Holding Rates
In line with most analysts’ forecasts, the BOC avoided cutting the lending rate on Wednesday. This confirms Governor Stephen Poloz’s assertions that the ‘Loonie’ has shown more resilience against low energy prices than traders had expected.
The Canadian Dollar failed to advance after the news, however, as tanking oil prices weighed on demand for the commodity-correlated asset. Black-gold priced declined in response to the bullish US Dollar. ‘Crude oil futures reversed early gains to fall below $63 a barrel on Wednesday as the Dollar’s recovery from early losses outweighed expectations of a draw on US oil stocks,’ stated Himanshu Ojha, writing for Reuters. WTI crude is currently trading below $58 per barrel.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Steady ahead of UK GDP
Given the complete absence of further domestic data publications to spark changes, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold steady for the remainder of Wednesday’s European session. Thursday will be of significance to the GBP/CAD pairing as UK growth data is due for publication. If British Gross Domestic Product meets with economists’ forecasts of a 0.1% increase, the Pound is likely to rally versus its major peers. Canadian data is unlikely to be particularly impactful with trader focus on both geopolitical developments in Europe and crude oil prices.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed to a high of 1.9186 today.
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