The Pound to Canadian Dollar exchange rate was able to hold its ground on Tuesday after recovering most of last week’s losses at the beginning of the week. Solid UK data and mixed oil forecasts allowed GBP/CAD to hold above the week’s opening levels of 1.62 and trade at around 1.63.
Pound (GBP) Sturdy as Public Sector Net Borrowing Impresses
Sterling advanced on Monday thanks to optimism surrounding potential amendments the House of Lords could make to the conditions of the Article 50 bill before it is activated.
It was able to easily advance against a weakened Canadian Dollar and held its ground on Tuesday too thanks to the day’s solid UK ecostats.
Tuesday saw the publication of Britain’s January public sector net borrowing results, which improved from -£4.24b to £9.82b. As the Office for National Statistics (ONS) changed its methodology for the print, the forecast of £14b was irrelevant.
The ONS and analysts celebrated the January result, which was the biggest surplus in 17 years. While the UK Treasury remains cautious, this has increased hopes that Britain will hit its deficit target for the 2016 fiscal year (which ends at the end of March).
Sterling was held back slightly by jitters later in the morning as Bank of England (BoE) officials, including Governor Mark Carney, were questioned by MPs in Parliament.
Canadian Dollar (CAD) Mixed on Oil Forecasts
The oil-correlated Canadian Dollar has put on a mixed performance this week, allowing the Pound to make and hold gains.
A dip in appetite for risk as well as uncertainty in key commodity markets has left the risky Canadian Dollar relatively limp.
Prices of Canada’s most lucrative commodity, oil, have increased this week as traders continue to put long positions on the commodity amid high expectations for OPEC’s plans to cut oil production, but oil stockpiles remain high.
Many Canadian markets were closed on Monday to observe public holidays, which also left CAD weaker.
GBP/CAD Forecast: UK Growth Stats in Focus
Wednesday will be an influential session for the Pound to Canadian Dollar exchange rate.
The morning will see the publication of Britain’s preliminary Q4 2016 Gross Domestic Product (GDP) results. These are projected to remain at 0.6% quarter-on-quarter and 2.2% year-on-year.
If UK growth falls short of expectations, Sterling is likely to plunge as traders will be concerned about how the slowing UK retail sector is affecting the country’s growth. On the other hand, a better-than-expected GDP report will lend the Pound further support.
During Wednesday’s American session, Canada’s December retail sales prints will be published. Analysts have low hopes for this one, projecting a weak result of 0.1% month-on-month.
If these results disappoint and the oil market still has nothing new to be confident about, the Pound could advance against the ‘Loonie’.