Pound to Canadian Dollar (GBP/CAD) Exchange Rate Steady as Housing Data Comes in Below Expectations
With markets closed on Monday for Canadian Thanksgiving GBP/CAD had plateaued at a rate of around CA$1.698 since Friday after climbing sharply in the early part of last week.
Today the Pound (GBP) remains flat against the Canadian Dollar (CAD) despite some disappointing housing stats undermining confidence in CAD.
New housing starts, seasonally adjusted for September, printed at 189k, which was down from the previous month’s 199k and far below the expected 210k.
Such a result failed to inspire confidence that the Canadian economy was on an upward trend and saw more downside pressure applied to CAD.
This isn’t the end of Canadian housing data this week, with building permits for September – released tomorrow – expected to show a rise of 1.3%, and Thursday’s New House Price Index due to come out on Thursday.
Pound Dominates Canadian Dollar despite Oil Price Rise
The Canadian Dollar (CAD) has been under pressure against the Pound (GBP) over the past week despite the inexorable rise in the price of oil, with the benchmark measure Brent hitting $85 a barrel before falling back slightly.
The oil-sensitive ‘Loonie’ has been unable to take full advantage of the rise in oil, however, as pipeline constraints and heavy discounting to US refiners have squeezed profit margins and prevented an outright rally, allowing GBP to rise against CAD.
Oil prices rose to a four-year high last week on continuing tight production and fears over the US government’s sanctions against Iran, which start on 4 November.
Pound Stumbles against Canadian Dollar (GBP/CAD) as Retail Sales Figures Dip
For the Pound (GBP) most movement so far this week has being driven by political developments and Brexit sentiment in the absence of any major data releases.
That said, some lacklustre retail sales figures this morning took any shine off the currency and helped it to extend the losses it sustained on Friday.
According to the British Retail Consortium (BRC) like-for-like retail sales showed a -0.2% decline in September.
Along with the figures, a report revealed that online sales of non-food items expanded by 5.4% against the previous year, prompting the BRC’s Chief Executive Helen Dickinson to call for taxes on bricks and mortar retail businesses to be reduced in order to level the playing field with online retailers:
‘These figures lay bare the difficult operating environment for the retail industry. After a challenging August, constrained consumer spending in September has resulted in the weakest sales growth for five months.
‘The retail industry pays a disproportionate amount of tax. It represents 5% of the economy but pays 10% of business tax and almost 25% of business rates. A tax system skewed towards high taxes on people and property is contributing to stores closures and job losses and is stalling the successful reinvention of our high streets.’
GBP/CAD Outlook: UK GDP Figures and Brexit Talks in the Spotlight
Tomorrow sees the release of the latest monthly UK gross domestic product data.
Forecasts currently point to a fresh loss of momentum in August, with growth expected to show a slowdown from 0.3% to 0.1% on the month.
If this is so, and after an uninspiring second quarter GDP figure, we are likely to see GBP weaken against CAD.
At the same time, Brexit manoeuvrings will be taking centre stage as traders attempt to make sense of any soundbites or press releases coming out of Brussels or Downing Street.
Pressure is building to get a deal done between the UK and the EU and a meeting taking place on October 17th -18th will see European Council members discuss Brexit, with any deal being struck then having the possibility to drive Sterling sharply higher against the Canadian Dollar.