After falling across the board last week following the Bank of England’s (BoE) interest rate decision, the Pound extended losses against the ‘Loonie’ on Monday.
The Canadian Dollar has started the week on cautiously-optimistic note, with recent commodity price movements enabling a small increase in the currency’s value.
Last week the GBP/CAD pairing shifted between 1.7533 and 1.7051.
Pound Slips Vs. Canadian Dollar on BoE Cut and Southern Rail Strike
The start of the week has been a lacklustre one of the Pound, with the currency posting declines against the Canadian Dollar and a number of its other currency peers.
UK data was sorely lacking at the start of the week, giving Sterling little impetus to recover from last week’s big news – the Bank of England (BoE) cutting the UK interest rate from 0.5% to 0.25%.
This was in response to a flagging UK economy, which has been linked to the decision of just over half of UK voters to leave the European Union in late June.
As well as the BoE decision continuing to weigh on the Pound, the UK economy has come under further strain due to strike action among Southern rail employees.
This is due to disputes about the role of the driver and the conductor on trains, with the threat of reducing the duties of the latter role (and potentially the salary) triggering the week’s five day walkout.
Given that most of the affected lines run into London, ‘business as usual’ among both Government and major financial institutions has been negatively affected and will continue to be damaged over the course of the week.
Canadian Dollar Supported by Rising Crude Oil Prices
In CAD exchange rate news, the Canadian Dollar has registered a slight appreciation against the Pound, shaking off the impact of last week’s disappointing Canadian employment data.
‘Loonie’ gains were enabled by the latest commodity news; while the cost of gold per 100 ounces has fallen to $1337.5, the cost of crude oil per barrel on the WTI index has more supportively risen to $42.43, up from under $40 at the end of the previous week.
The cost of oil on the global market remains an uncertain prospect, given how frequently OPEC has failed to come to an agreement on limiting production to raise the overall cost of the commodity.
Recently, OPEC President Mohammad bin Saleh al-Sada has stated that;
‘OPEC continues to monitor developments closely, and is in constant deliberations with all member states on ways and means to help restore stability and order to the oil market’.
GBP/CAD Exchange Rate Forecast
This week, Pound Sterling/Canadian Dollar exchange rate movement may occur as a result of the UK trade balance and production stats (due out tomorrow), as well as Friday’s construction output result for June.
From Canada, notable data will include Tuesday’s housing starts result, as well as Thursday’s new housing price index for June.
To summarise potential UK data results, the current trade deficit for June is expected to expand, while industrial and manufacturing stats for the same month have improvements forecast.
Annual construction output is expected to worsen from -1.9% to -2.3%.
From Canada, housing starts for July are expected to shift from 218.3k to 182k.