The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within a tight range on Wednesday morning.
Although the British services sector registered the fastest acceleration in 8 months, the Pound softened versus the majority of its most traded currency competitors. This is mostly due to dampened investor confidence amid political uncertainties as the general election moves towards conclusion.
The Canadian Dollar, meanwhile, edged higher versus many of its most traded currency rivals in response to rising crude oil prices. The gains have been somewhat laboured, however, as traders await the Ivey Purchasing Managers Index.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8270.
Pound Sterling (GBP) Exchange Rate Softens on Election Jitters
With opinion polls showing that neither the Conservatives nor Labour will win a clear majority, political uncertainty is weighing heavily on Sterling investment. With expectations of a dramatic policy change and a new coalition, the Pound is unlikely to sustain any significant advance until the conclusion of the election.
A very positive services data result wasn’t enough to push the Pound higher despite the fact that the services sector accounts for a large portion of British Gross Domestic Product. The UK Services PMI was forecast to drop a little from 58.9 to 58.5 in April, but the actual result rose to an 8-month high of 59.5.
Chris Williamson, Chief Economist at Markit, stated; ‘The PMI surveys suggest the economy is showing robust growth momentum, expanding at a rate of 0.8% at the start of the second quarter. As such, it looks like the economy has rebounded from the weakness seen at the start of the year. But there are warning lights flashing about the sustainability of growth, and any new government is faced with the challenge of boosting business confidence and reviving investment in particular.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has fallen to a low of 1.8235 today.
Canadian Dollar (CAD) Exchange Rate Strengthens on Oil Prices
As traders await the Ivey Purchasing Managers Index, due for publication later on Wednesday afternoon, the ‘Loonie’ (CAD) edged higher versus many of its major peers. The advance has been somewhat sluggish, however, with the soft US Dollar weighing on the Canadian Dollar.
The ‘Loonie’ advance can be attributed to rising oil prices amid US stock declines and conflict in the Middle East. ‘We haven’t seen hedge funds and money managers to be as optimistic and bullish as they are currently,’ said Vyanne Lai, an oil analyst with National Australia Bank. ‘They are at their most bullish since July last year, when the oil market fundamentals haven’t really changed that much.’
‘In less than two months, the price of the Canadian benchmark heavy crude has surged more than 70 per cent, outpacing West Texas intermediate (WTI), Brent and a bunch of other regional types of oil by wide margins,’ stated Jeffrey Jones writing for The Globe and Mail.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Decline
With the general election just around the corner, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to soften for the remainder of Wednesday’s European session. With that being said, however, a surprise result from the Canadian Ivey PMI may cause GBP/CAD fluctuations.
Thursday’s Canadian Building Permits may cause GBP/CAD volatility, but the likelihood of the Pound advancing on Election Day is slim-to-none.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed to a high of 1.8348.
Comments are closed.