The Pound to Canadian Dollar exchange rate has so far spent the week slumping as the latest UK data indicates that the nation’s retail sector is slowing. Brexit concerns also contributed to the GBP/CAD dip from 1.64 to 1.63 despite mixed oil news limiting demand for the risky Canadian Dollar.
Pound (GBP) Slumps as UK Data Disappoints
A run of below-forecast UK data (including last Friday’s UK services PMI) continued with the latest retail sales report from the British Retail Consortium (BRC).
According to the report, for the three months leading into February 2017 non-food retail sales slumped by -0.4% year-on-year – the first drop since November 2011.
Following last week’s disappointing slowing in UK services PMI, this report increased concerns that British growth would slow in 2017 as consumers reign in spending due to higher inflation.
Brexit concerns also weighed on Sterling demand this week, as the Brexit bill looked to be passed between the UK House of Lords and House of Commons before Article 50 can be activated and the process can begin.
On Monday, a spokesperson for UK Prime Minister Theresa May indicated that May was hesitant to give UK Parliament full veto power over the final Brexit bill as she feels this would give the EU an incentive to keep giving Britain a bad deal until one is accepted.
Canadian Dollar (CAD) Advances Despite Mixed Oil Prices
The Canadian Dollar was able to benefit from weakness in the Pound on Monday and Tuesday, advancing despite a lack of supportive Canadian news and fluctuating crude oil prices.
Oil prices have demonstrated instability for several weeks now, with rising US shale oil production offsetting output cuts from OPEC member nations and other cooperating non-OPEC oil producers.
Brent crude spent most of Tuesday trending at around US$55.95 per barrel.
GBP/CAD Forecast: Friday in Focus
As the week continues, relatively influential reports due for release on Wednesday and Thursday could inspire movement in the Pound to Canadian Dollar exchange rate, as could the UK’s Spring Budget. Any concerning news for the UK would send GBP/CAD lower.
Friday’s session will also be interesting as Britain’s January trade balance results will be published. The deficit is expected to remain around -£3b.
The day will also see the publication of Canada’s February employment results. Following January’s impressive 48.3k increase in employed persons, the economy is believed to have added a more modest 2.5k positions in February.