Update: Pound to Canadian Dollar Exchange Rate Fails to Hold Weekly Highs as Investors Await Wednesday News
Tuesday’s UK and Canadian data left the Pound to Canadian Dollar (GBP/CAD) exchange rate less appealing.
As a result, GBP/CAD trended nearer the interbank level of 1.79 at the time of writing after slipping back from its weekly highs.
Demand for the Canadian Dollar (CAD) firmed slightly on Tuesday afternoon as Canada’s February manufacturing sales results beat expectations.
The figure rose from -1.3% to 1.9%, beating the forecast 1%.
GBP/CAD may struggle to reach its weekly highs again unless Wednesday’s Bank of Canada (BoC) news disappoints or UK inflation data is highly impressive.
Pound to Canadian Dollar Exchange Rate Gains Limited Ahead of BoC Policy Decision
A mixed UK job market report left the Pound to Canadian Dollar (GBP/CAD) exchange rate unable to hold its best levels on Tuesday morning, and the pair could shed more of its gains in the coming days.
Due to a resurgent Canadian Dollar (CAD), GBP/CAD has seen major losses over the past month. Last week the pair fell from the interbank level of 1.80 to 1.79 and even touched a low of 1.78.
So far this week, GBP/CAD had recovered to the level of 1.80 again. However, if Canadian Dollar demand improves again the pair may not be able to hold these gains.
Analysts are speculating that the Bank of Canada (BoC) may take a more hawkish tone in its monetary policy decision on Wednesday.
This is due to hopes that the US and Canada are working through trade issues, as well as stronger oil prices, which have made markets more optimistic about the BoC outlook.
Oil is Canada’s most lucrative commodity and is often correlated to the nation’s economic outlook and the strength of the Canadian Dollar.
Pound (GBP) Exchange Rates Fall from Highs as UK Wage Growth Misses Forecasts
Tuesday morning saw the publication of Britain’s February jobs market results, which were generally optimistic save for one key print.
Britain’s average wages including bonuses from February were forecast to rise from 2.8% to 3%, but instead remained at 2.8%.
While the figure excluding bonuses also rose to 2.8%, as forecast, and the wage data officially took over UK inflation signalling that the UK pay squeeze was finally easing, the data was still underwhelming.
As a result, the Pound to Canadian Dollar (GBP/CAD) exchange rate fell back slightly from this week’s highs.
Many traders still believe that a May interest rate hike from the Bank of England (BoE) is as good as certain despite the slightly underwhelming data, although some analysts believe uncertainty remains.
Other jobs market stats were more impressive, with the employment change and unemployment results beating expectations. These, however, had little impact on the Pound (GBP).
Canadian Dollar (CAD) Exchange Rates Continue to Steady Ahead of BoC
Following weeks of gains for the Canadian Dollar, the currency has seen slightly weaker – but still decent – performance this week so far.
This is largely due to market hopes that the US and Canada will work through trade issues and successfully renegotiate the North American Free Trade Agreement (NAFTA).
Oil prices have also helped Canadian Dollar strength over the past week, though this has been supporting the currency less in recent sessions amid expectations that the commodity could soon fall from its highs.
Overall though, the Canadian Dollar remains appealing as investors brace for a potentially more optimistic view from the Bank of Canada (BoC) during Wednesday’s policy decision meeting.
Pound to Canadian Dollar (GBP/CAD) Forecast: Major Movement Possible on Wednesday’s News
Wednesday will see the publication of most of this week’s most notable UK and Canadian news, which could cause some Pound to Canadian Dollar (GBP/CAD) exchange rate movement towards the end of the week.
Britain’s March Consumer Price Index (CPI) results will be published, with these being perceived as the final potential obstacle for Bank of England (BoE) interest rate hike bets.
If UK inflation meets or beats expectations, the Pound outlook is unlikely to change significantly as markets already widely expect a BoE rate hike in May.
However, disappointing UK inflation could cause BoE bets to fall, which could drag the Pound much lower.
Major Canadian Dollar movement is also possible on Wednesday, depending on the tone the Bank of Canada (BoC) takes during its policy decision meeting during the American session.
Economists are predicting that the bank may take a more hawkish outlook towards 2018 monetary policy, due to the recent relaxing of trade jitters as well as stronger commodity prices.
If the BoC is hawkish and BoC interest rate hike bets rise, the Pound to Canadian Dollar (GBP/CAD) exchange rate is forecast to fall and may even see a fifth consecutive week of losses.