Foreign Currency Market Update – GBP / CAD Update
Over the past week, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 2.0115 to 2.0382.
The Canadian Dollar has been trending in a generally softer position of late in response to bearish crude oil prices. The price of oil began to drop after Iran secured a deal to end the sanctions on its crude exports in return for curtailing its nuclear plans. Global oversupply has become a significant issue with US stock piles rising exponentially and this development threatens to exacerbate the situation further. Even relatively positive domestic data results, which showed retail sales bettered estimates on both an annual and a monthly basis, wasn’t enough to overshadow concerns of the detrimental impact bearish crude will have on the Canadian economy.
The British Pound fluctuated versus the Canadian Dollar over the past week in response to British data and Bank of England (BoE) interest rate hike rhetoric. While the domestic ecostats were mixed, hints of a 2015 interest rate increase saw the British asset broadly strengthen versus most of its currency rivals before faltering on Thursday in response to disappointing UK retail sales figures.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within a narrow range on Tuesday morning.
Despite the fact that crude oil prices remain bearish, the Canadian Dollar gained versus many of its currency rivals during Tuesday’s European session. The appreciation can be linked to mounting concerns that the Federal Reserve will delay a benchmark rate hike for the foreseeable future amid fears regarding the fallout from a Chinese stock market crash. The longer the Fed delays a rate hike, the better for the Canadian Dollar as an easing to the widening policy divergence between the neighbouring nations may fuel demand for the ‘Loonie’ (CAD).
The Pound, meanwhile, strengthened versus many of its currency rivals thanks to second-quarter UK growth data meeting with median market forecasts. However, the headline figure masks a slowdown in the manufacturing sector. This has stoked fears that the reliance on services growth will cause Bank of England (BoE) policymakers to delay a cash rate increase until manufacturing picks up.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 2.0300 during Tuesday’s European session.
Looking ahead, Canadian economic data is a little thin on the ground this week. Later on Tuesday, the Canadian Producer Price Index is due and has the potential to provoke changes for the ‘Loonie’. On Friday, Canadian Gross Domestic Product is due for publication. After posting four consecutive months of contraction from January to April, May’s figure will be of interest because it’s forecast to come in at 0.0%. Another negative result would make it even more likely that Canada entered recession in the second quarter for the first time since 2009.
In terms of British data there will be several publications with the potential to provoke changes for the Pound. Of particular interest will be Friday’s Consumer Confidence Survey to see whether low interest rates and accelerated wage growth will impact upon consumer confidence.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 2.0229 to 2.0324 during Tuesday’s European session.
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