GBP/CAD Exchange Rate Pressured by Increase in Crude Prices
UPDATE: The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate continues to trade close to an eight-month low this afternoon following a sharp upturn in oil prices.
The price of oil, one of Canada’s key exports increased on Tuesday, with WTI crude climbing 0.6% as the US revived sanctions again Iran cutting off a major source of global oil and bolstering the ‘Loonie’.
Meanwhile the GBP exchange rate remained range bound this afternoon do to a lack of market moving data.
Pound Canadian Dollar (GBP/CAD) Exchange Rate Goes South as BoE Interest Rate Hike Disappoints
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate tumbled last week as markets reacted to a long-awaited rate hike from the Bank of England (BoE).
While GBP investors may have welcomed the decision to raise interest rates to 0.75% following last week’s policy meeting, it failed to spur demand in Sterling and in fact saw the currency plummet as the BoE made it clear this would be the only hike for the foreseeable future.
Elsewhere the Pound was dented by the UK’s latest PMI figures which showed the UK’s private sector to have slowed faster than expected at the start of the third quarter.
Meanwhile the Canadian Dollar got off to a solid start last week, with rising oil prices and a better-than-forecast GDP reading both helping to strengthen the currency throughout the first half of the session.
This left the ‘Loonie’ in good stead following the Pound’s slide in the wake of the BoE’s rate decision which, combined with some impressive trade figures, propelled the GBP/CAD exchange rate to its lowest levels since the start of the year.
Pound Sterling (GBP) Exchange Rate Steadies as UK House Prices Rise
After striking a near nine-month low against the Canadian Dollar (CAD) on Monday, the Pound (GBP) appears to have found its footing again this morning following the release of the UK’s latest housing data.
According to Halifax’s House Price Index, annual price growth surged from 1.8% to 3.3% in July, easily outpacing forecasts of a more modest 2.7% rise and striking their highest growth rates since November.
Analysts at Halifax attributed the rise to easing pressures on household finances, with recent wage growth outstripping inflation.
However the Pound struggled to translate this into gains this morning as many economists remain sceptical, warning that the UK housing market remains soft, especially in light of the recent rate hike from the BoE.
We remain doubtful #UK #housing market is stepping up a gear despite #Halifax reporting #house prices spiked 1.4% m/m in July taking annual increase up to 3.3% . Activity is still relatively lacklustre despite coming modestly off 2018 lows with consumer conditions challenging https://t.co/IP3NDFhmIx
— Howard Archer (@HowardArcherUK) August 7, 2018
Canadian Dollar (CAD) Exchange Rate Lifted by Jump in Oil Prices
At the same time the Canadian Dollar (CAD) remains buoyed this morning by a sharp uptick in oil prices.
Brent crude has risen as much as 0.75% this morning as the US reinstated economic sanctions against Iran, prompting concerns about possible global oil supply issues.
With oil accounting for around 15% of Canada’s total exports the rise in crude prices has helped to buoy the Canadian Dollar.
GBP/CAD Exchange Rate Forecast: UK GDP Data Likely to Prompt Sterling Rally
Looking ahead to the rest of this week’s session the focus for investors is likely to be on the UK’s latest GDP figures.
We could see the Pound Sterling Canadian Dollar (GBP/CAD) exchange rate rally later in the week as economists forecast that UK economic growth will have rebounded in the second quarter.
Meanwhile CAD investors will be paying close attention to Canada’s latest employment figures, with a possible fall in the unemployment rate in July likely to bolster the ‘Loonie’.