Trump’s Threat of EU Car Tariffs Fail to Dent GBP/CAD Exchange Rate
UPDATE 16:16 BST: On a relatively quiet close to the week, the Pound to Canadian Dollar (GBP/CAD) exchange rate has risen by 0.3%.
The latest news is that US President Donald Trump has threatened tariffs against the import of vehicles from the EU:
Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!
— Donald J. Trump (@realDonaldTrump) June 22, 2018
It is worth remembering the UK is still part of the EU, so these tariffs would also affect any vehicles made in the UK and exported to the US.
Despite the threat of future trade disruption, GBP traders have still been focusing on Thursday’s Bank of England news which has kept Sterling in demand.
Missed Canadian Inflation Rate Figures Leave GBP/CAD in Strong Position
UPDATE 14:30 BST: The Pound (GBP) has risen to its best level against the Canadian Dollar (CAD) since late April, thanks to continued support for Sterling.
The recent Canadian inflation rate figures for May have failed to excite CAD traders by remaining static or declining, leaving Pound Sterling as the stronger currency.
There has been additional disappointment on the Canadian side because April’s retail sales figures printed negatively or fell by more than expected.
Growing Hopes for August Interest Rate Hike Push GBP/CAD Exchange Rate Higher
The Pound to Canadian Dollar (GBP/CAD) exchange rate has continue to trade at a weekly high today, in the wake of Thursday’s Bank of England (BoE) monetary policy meeting.
This brought the expected interest rate freeze, but Sterling still appreciated because an additional policymaker backed higher interest rates.
Andy Haldane, a historically cautious Monetary Policy Committee (MPC) member, voted to raise interest rates along with ‘regular’ hawks Ian McCafferty and Michael Saunders.
The assumption now is that there could be a BoE interest rate hike by August, although this outcome is still sensitive to UK economic data in the weeks ahead.
Canadian Dollar to Pound Sterling (CAD/GBP) Exchange Rate Declines on Sales Slowdown
The Canadian Dollar (CAD) has fallen against Pound Sterling (GBP) and other currency peers today, following lacklustre sales figures released on Thursday.
The wholesale sales reading for April grew at a significantly slower pace during the month compared to March, printing at 0.1% compared to 1.4%.
This was also a worse-than-expected reading, as a rise of 0.4% had been forecast.
Pound Sterling to Canadian Dollar Exchange Rate Forecast: Risk of GBP/CAD Losses Likely on Higher Inflation
The Pound’s (GBP) tentative advance against the Canadian Dollar (CAD) could give way to losses in the near-term, when Canadian inflation rate data comes out this afternoon.
The readings for May are predicted to show higher levels of ‘base’ inflation, for the month-on-month and year-on-year readings.
The Bank of Canada (BOC) aims to keep inflation around 2%, but a forecast-matching annual rise would see price growth shift from 2.2% to 2.5%.
This would put more pressure on BoE policymakers to consider an interest rate hike, so could lead to the Canadian Dollar appreciating against Pound Sterling.
Beyond this data release, the Canadian Dollar could also be affected by a speech from BOC Governor Stephen Poloz on the coming Wednesday.
If inflation rises today and Mr Poloz later hints at an interest rate hike to compensate for this, the CAD/GBP exchange rate could rise sharply.
Weekly GBP/CAD Exchange Rate Prediction: Risk of Pound Sterling to Canadian Dollar Losses on UK GDP Slowdown
The next notable UK economic data is a week away and might reinforce a Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate decline if it disappoints.
This will be the finalised UK GDP growth rate results for Q1 2018, which are expected to confirm economic activity slowed at the start of the year.
A poor GDP reading has already been widely predicted, but an official confirmation could still result in the Pound (GBP) declining against the Canadian Dollar (CAD).