Pound Canadian Dollar (GBP/CAD) exchange rate Flat in Wake of Canadian Trade Figures
The Pound to Canadian Dollar (GBP/CAD) exchange rate is holding steady this afternoon after the ‘Loonie’ (CAD) was forced to part with its early gains in the wake some disappointing domestic trade figures.
A surge in imports at the end of the first quarter and shrink exports to the US saw Canada’s trade deficit explode to a new record high in April, prompting some weakness in CAD.
Meanwhile Sterling (GBP) continued to struggle in the face of a lacklustre services PMI on Thursday, ultimately leaving the Pound Canadian Dollar exchange rate unchanged from the day’s opening levels.
Pound Canadian Dollar (GBP/CAD) exchange rate Tumbles as UK Services Sector Remains in ‘Slow Lane’
The Pound to Canadian Dollar (GBP/CAD) exchange rate is edging lower again this morning as a weak Service PMI has prompted concerns over the UK’s second quarter growth prospects.
At the time of writing the GBP/CAD exchange rate is down around 0.2% from this morning’s opening levels, with £1 buying CA$1.74 at the time of writing, extending the pairing’s losses to two cents so far this week.
Pound Canadian Dollar Exchange Rate (GBP/CAD) Slides as UK Economy Loses Momentum
The Pound Canadian Dollar (GBP/CAD) exchange rate is slipping back again this morning as markets react to the latest UK services PMI.
According to data published by IHS Markit, the UK’s services PMI only rose from 51.7 to 52.8 in April, falling short of forecasts that the index would rise to 53.5 and pressuring the Sterling (GBP) exchange rate.
The survey revealed activity in the service sector failed to rebound as strongly as expected from the heavy snowfall in March, with Brexit uncertainty being blamed for lacklustre new orders demand and sluggish employment growth.
Following on from April’s subdued manufacturing and construction PMIs, the disappointing result is a further blow to the UK’s economic prospects, with GBP investors bracing for another quarter of subpar growth.
Chris Williamson, Chief Business Economist at IHS Markit said:
‘The services survey adds to signs that the rate of economic growth remained disappointingly subdued at the start of the second quarter.
The overall expansion signalled by the three surveys in April was the second-weakest since the Brexit vote, pointing to a quarterly rate of GDP growth of around 0.2% at the start of the second quarter.’
Canadian Dollar (CAD) Exchange Rate Strengthened by US-China Trade Talks
Meanwhile the risk sensitive Canadian Dollar (CAD) is pushing higher against the Pound (GBP) this morning thanks to optimism ahead of US-China trade talks.
Markets appear cautiously optimistic going into today’s talks as observers suggest the two sides may be able to cool trade tensions and avoid any threat of a damaging trade war.
This optimism has helped to strengthen market risk appetite, buoying currencies such as the Canadian Dollar (CAD) and applying further pressure to the GBP/CAD exchange rate.
Pound Canadian Dollar (GBP/CAD) Exchange Rate Forecast: Canadian Trade Balance May Lift the ‘Loonie’
Looking ahead the Pound Canadian Dollar (GBP/CAD) exchange rate may extend its losses later this afternoon as Canada publishes its latest trade balance data.
Economists forecast today’s data will show the domestic trade deficit narrowed from -CA$2.69bn to -CA$2.24bn in March, possibly lending some support to the Canadian Dollar (CAD).
Meanwhile a lull in notable UK data means the shadow of the Bank of England’s May policy meeting is likely to hang over the Pound (GBP) exchange rate over the coming days.
This may leave Sterling struggling to find its footing as it now looks extremely unlikely the Monetary Policy Committee (MPC) will vote to raise interest rates this month.