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 2.0237 to 2.0567.
The Pound Sterling has fluctuated significantly over the past week in response to mixed results from domestic data as, in the knowledge that the Bank of England (BoE) is looking to increase the benchmark interest rate within a comparatively short period of time, traders have been responding to each individual ecostat. Two of the biggest hindrances to a cash rate increase, however, are the absence of inflationary pressure and fears regarding the global economic slowdown.
Conversely, the Canadian Dollar generally softened versus its major peers last week as crude prices dropped to an over six-year low. Additional losses can be attributed to fears of widening policy divergence between Canada and the US. With the Federal Reserve looking to hike the lending rate within 2015, Canada’s central bank is flirting with further rate cuts in order to accommodate for the rapid drop in crude prices.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced by around 0.4% during the early stages of Monday’s European session.
In response to hawkish comments from a Bank of England (BoE) Monetary Policy Committee (MPC) member, the Pound rallied versus its major peers. Kristin Forbes stated that the UK’s growth is similar to pre-crisis levels and that a rate hike is appropriate at this time. She also argued that holding the benchmark interest rate at 0.5% could be damaging the UK’s economic progress. Additional Sterling gains can be linked to Augusts’ Rightmove House Prices which advanced by 6.4% on the year despite dropping by -0.8% on the month.
Monday’s European session has seen the Canadian Dollar soften versus its major rivals thanks to tanking crude oil prices. Oil is hovering close to a six-year low after data showed that Japan’s economy contracted and US drilling rigs were added to for the fourth consecutive week. The global oversupply picture is looking bleak and the Canadian Dollar is suffering in response.
Looking ahead, there are several influential economic publications due out over the coming week with the potential to provoke changes for the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate. Tuesday’s British inflation data will be of significance given the lack of inflationary pressure preventing a BoE rate hike. Canadian inflation data, due for release on Friday, will also have a marked impact on the GBP/CAD exchange rate.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 2.0491 to 2.0574 during Monday’s European session.
Heads Up
Summary of major upcoming data releases that we think may move the market.