The Pound dipped against the Canadian Dollar as oil prices fluctuated and optimism about a surge in UK reported sales eased.
The main UK news today has been the British Retail Consortium’s (BRC) April reported sales figure. Figures showed a rise of 5.6%, making up for March’s -1% drop and superior to the forecast gain of 0.5%.
This outcome failed to raise Pound demand, however, as the unexpected rise was attributed to a late Easter. Looking ahead, BRC Chief Executive Helen Dickinson has warned that;
‘Today’s figures indicate that consumers are still willing to spend, [but] with a cocktail of rising costs and slowing wage growth, conditions for consumers will get tougher. The next government needs to deliver a plan that puts consumers first in its economic policies and the forthcoming Brexit negotiations’.
Canadian Dollar Advances on CBOC’s 2.3% Growth Forecast
The Canadian Dollar has risen against the odds today, pushed up by a Conference Board of Canada (CBOC) forecast.
The CBOC estimates Canadian economic growth at 2.3% in 2017, a superior figure to that recorded in 2015 and 2016.
However, CBOC official Matthew Stewart has warned that weakness in ‘business investment and international trade’ will limit the Canadian economy next year. If the Trudeau government succeeds in courting Chinese trade interest, however, these issues may cease to be before 2018 begins.
Oil prices also steadied after previously increasing on rumours that OPEC plans to extend its production cut.
GBP/CAD Forecast
This week, Pound/Canadian Dollar exchange rate movement is likely to follow Thursday’s UK data, which includes construction, trade, production and the Bank of England (BoE) interest rate decision.
Running through the UK’s busy day, construction output is forecast to have risen by 2.8% in March, which could ease house price pressures. The April trade balance posted a -3.66bn deficit and an improvement to -3bn is forecast for May.
Annual UK industrial and manufacturing production figures are forecast to slow in March and the Bank of England (BoE) is not expected to ruffle any feathers due to June’s upcoming general election.
This means no forecast interest rate change from 0.25%. Upwardly revised inflation forecasts would be Pound-positive however. With wage growth currently glacially slow, higher inflation will only further pressurise UK consumers, leading to negative impacts on retail sales and activity. This would up the odds of the BoE increasing interest rates.
Canadian Dollar movement this week will be determined by the housing market, with Thursday bringing the new house price index for March.
Prices previously rose by 0.4% on the month and 3.3% on the year; slower monthly growth of 0.3% is forecast.
If both indexes show accelerating house price growth then the CAD GBP exchange rate could slide on fears of a housing market bubble.
The price of crude oil could also influence the Canadian Dollar. If the cost per barrel remains near the $46 mark then the CAD could fail to rise against the Pound.