GBP/CAD Exchange Rate Advances as UK Economic Data Boosts BoE Rate Expectations
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate appreciated throughout the first half of last week’s session, largely thanks to some upbeat economic data as well as rising Bank of England (BoE) rate expectations.
There were some setbacks however as Sterling was pressured by growing Brexit uncertainty in the tail end of the week, leaving the currency to relinquish much of its gains.
Meanwhile the Canadian Dollar (CAD) stumbled in the middle of last week following a sharp drop in oil prices, before rallying by the end of the session as markets welcomed an uptick in domestic wage growth.
Pound Sterling (GBP) Exchange Rate Lifted as UK Employment Reaches Record High
The Pound (GBP) appears to be on solid footing against the Canadian Dollar (CAD) today as markets welcome the UK’s latest employment statistics.
According to data published by the Office for National Statistics (ONS), the domestic jobless rate held at a 43-year low of 4.2% in May as unemployment fell by 38,000 to 1.42 million.
Employment was also shown to have stuck a record high of 32.3 million in May as an additional 146,000 people joined the UK work force.
However, slightly taking the wind out of the Pound’s sails were the accompanying wage figures, which revealed wage growth unexpectedly fell back from 2.9% to 2.8% at the start of the second quarter.
While this still leaves wage growth ahead of inflation – which was reported to be at 2.4% in April – it comes as a blow to the BoE, with the bank counting on a pickup in wages helping to fuel a rebound in economic growth later this year.
This could also put the brakes on the chances of a rate hike this year, much to the disappointment of GBP investors.
Canadian Dollar (CAD) Exchange Rate Weakened by Hostile Trade Rhetoric from Donald Trump
At the same time the Canadian Dollar (CAD) is trending lower against the Pound (GBP) and the majority of its other peers this morning as markets remain spooked by President Trump’s recent criticism of the trade relationship between the US and Canada.
Trump blasted Canadian Prime Minister Justin Trudeau on Twitter earlier this week, branding him as ‘very dishonest and weak’ following a heated G7 summit over the weekend.
PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, “US Tariffs were kind of insulting” and he “will not be pushed around.” Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!
— Donald J. Trump (@realDonaldTrump) June 9, 2018
Reports are suggesting this hostile tone from Trump is now threatening to undermine the ongoing NAFTA renegotiations, placing considerable pressure on the ‘Loonie’.
GBP/CAD Exchange Rate Forecast: Will Rising Inflation Help to Bolster Sterling?
Looking ahead the Pound Sterling Canadian Dollar (GBP/CAD) Exchange rate may continue to tick higher later this week, with an expected increase in UK inflation likely to drive demand for Sterling.
Meanwhile the Canadian Dollar is likely to continue to struggle this week as NAFTA talks look to become increasingly hostile, with the possibility of the US walking away from the agreement likely to hand over the ‘Loonie’.