The Pound has been through the ringer as a result of UK events, causing the currency to lose ground against the Canadian Dollar in spite of falling oil prices. While Friday witnessed a major resignation for the Conservative party, today Sterling has been pressured by the Confederation of British Industry’s (CBI) latest ‘Brexit’ forecasts.
Last week saw a general deterioration in the GBP/CAD exchange rate, with the pairing sliding from 1.9049 to 1.8809.
Sterling Rocked by IDS Resignation over Budget Controversy
The Pound’s losses kicked off at the close of last week. In the wake of Wednesday’s 2016 Budget Announcement showing a plan to cut disability benefits in order to meet the 2016 surplus target, Secretary of State for Work and Pensions Iain Duncan Smith resigned from the position, calling the measures a ‘compromise too far’.
The role was quickly filled by Stephen Crabb, who promptly dropped the disability cut proposals, but the damage had already been done due to the exposure of major rifts between members of the governing political party.
CBI Concerns Spill over into Waning Investor Interest Today
CBI piled further pressure on the Pound today when it estimated that around £100bn and almost a million jobs could be lost before 2020 in the event of the UK leaving the EU.
Adding to the misery generated by this news have been the CBI’s latest trends for total orders and selling price reports. Respectively, shifts have been recorded from -17 to -14 and from -3 points to -1.
Canadian Dollar Hindered by Poor Inflation Data
Last week was not a particularly good one in terms of Canadian Dollar movement, as the prices of valuable commodities such as gold and crude oil failed to sustain themselves, with both falling by the close of the week.
Friday also brought Canadian inflation data for February, which detailed an unexpectedly sharp slowing in consumer price pressures.
As only a single piece of Canadian data is due out this week, market sentiment and commodity price shifts are likely to dictate ‘Loonie’ movement.
GBP/CAD Exchange Rate Forecast
Over the week ahead, Pound Sterling/Canadian Dollar exchange rate movement may occur as a result of tomorrow’s UK inflation rate and borrowing figures for February, as well as Thursday’s UK retail sales stats for the same month.
On the Canadian side, the only scheduled announcement will be tomorrow night’s Federal Budget delivery by Canadian Finance Minister Bill Morneau.
Forecasts so far have been for improvements in the base monthly and annual UK inflation rate, but an expansion in the amount borrowed. Retail sales are expected to fall universally.
Heads Up
Summary of major upcoming data releases that we think may move the market.