The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within a limited range on Tuesday morning.
After British services data produced an impressive result, the Pound strengthened versus many of its major peers. A positive report from the Confederation of British Industry (CBI) also aided the Sterling uptrend. The appreciation has been somewhat laboured, however, with the general election and issues in Europe weighing on demand.
The Canadian Dollar, meanwhile, strengthened versus many of its major competitors with oil prices holding above $50 a barrel. Predictions that crude prices will resume declination has not infringed upon demand for the ‘Loonie’ (CAD) as it tracks the US Dollar surge ahead of minutes from the Federal Reserve’s most recent policy meeting.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8558.
Pound Sterling (GBP) Exchange Rate Advances on Positive Data
British services growth trumped expectations on Tuesday, reaching a seven-month high and allowing the Pound to strengthen versus the majority of its most traded currency competitors. The Markit Services PMI bettered the market consensus of a rise from 56.7 to 57.0, with the actual result reaching 58.9.
‘The UK economy moved up a gear in March,’ Chris Williamson, chief economist at Markit, said in a statement. ‘Faster growth of new business and improved expectations of prospects for the year ahead also bode well for the upturn to retain strong momentum as we move through the spring.’
Sterling also saw increased demand thanks to a report which showed UK growth was very positive in the first quarter. ‘The benefits of lower oil prices should be increasingly felt; with cheaper petrol boosting households’ incomes and spending power, and cutting costs for many businesses,’ said CBI’s deputy director general Katja Hall.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate dropped to a low of 1.8529 today.
Canadian Dollar (CAD) Exchange Rate Strengthens on Market Sentiment
After oil prices rose and the Reserve Bank of Australia (RBA) kept the cash rate on hold, trader risk-appetite improved. The commodity-correlated Canadian Dollar benefitted from this improved market sentiment.
As one of the world’s foremost oil exporters, the ‘Loonie’ is subject to fluctuations in crude prices. Although oil prices have since resumed declination, a significant previous surge is seeing continued demand for the Canadian Dollar.
In addition to market sentiment aiding the ‘Loonie’ uptrend, the US Dollar surge also provoked Canadian Dollar appreciation. The US Dollar strengthened in response to speculation that minutes from the most recent Federal Open Market Committee (FOMC) meeting will contain hawkish tones with regards to incremental rate revisions.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Steady
Given the lack of domestic data to curb the trend, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold relatively steady over the course of the European session. With that being said, however, there could be a significant change if oil prices continue to fall and settle below $50 a barrel.
Wednesday’s GBP/CAD trade is likely to be dominated by commodity prices and geopolitics given the lack of influential data to provoke volatility.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed to a high of 1.8606 today.
