After dropping on Friday, the GBP/CAD exchange rate has been able to move away from its worst levels.
Better-than-Expected Manufacturing Boosts GBP
The first of this week’s three UK PMI reports showed an unexpected improvement in manufacturing output, with the gauge rising from 54.2 points to 55.1.
The uptick was largely the result of an increase in exports.
Offering an outlook on the news was Pantheon Macroeconomics economist Samuel Tombs;
‘The export orders balance tends to lead the official export output data by about six months, so the balance tentatively suggests that net trade will finally start to support GDP growth around the turn of the year’.
The UK report lent the Pound some support, and GBP/CAD is currently trading at its best levels in over a week.
Canadian Dollar Supported by Crude Oil Prices, BOC Speculation
While the Pound has recouped some of its recent losses against the Canadian Dollar, gains have been limited in light of last week’s upbeat Canadian growth data and an uptick in oil prices.
Crude oil has risen to over $50 per barrel for the first time since late May. Adding additional support was the fact that July was the best month of price growth since April 2016.
Pound Turbulence Possible on PMIs and BoE Rate Decision
Additional UK PMI results and a Bank of England (BoE) interest rate decision are likely to cause further GBP/CAD movement.
Wednesday is expected to see a decline in construction sector activity, but a slight rise is projected for Thursday’s services sector result.
The services figure is the more important of the two, as the sector contributes the most to total UK growth.
Pound traders are also primed for Thursday’s Bank of England (BoE) interest rate decision. BoE policymakers are not anticipated to change interest rates, but the eight voting members of the Monetary Policy Committee (MPC) could be divided.
Support for an immediate rate hike would be Pound-supportive.
The week’s high-impact Canadian news is Friday’s trade balance, employment and confidence figures.
The trade deficit is forecast to expand, while unemployment is set to stagnate at 6.5%. The Ivey PMI has an improvement predicted from 61.6 points to 62.