GBP/CAD Exchange Rate Slide as Rising Oil Prices Offset Lacklustre Jobs Data
UPDATE: The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell back on Friday afternoon, despite Canada’s jobs market only adding 9,300 jobs in December.
This is likely thanks to the recent rise in crude prices that continued to feed into the oil-sensitive ‘loonie’.
Meanwhile Sterling relinquished its early gains this afternoon after a leading official in the Democratic Unionist Party suggested there is ‘no way’ that the party will back Theresa May’s Brexit deal in a vote later this month.
GBP/CAD Exchange Rate Stable Following UK PMI Data
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is edging higher this morning as markets react to the UK’s latest Services PMI.
At the time of writing the GBP/CAD exchange rate is virtually unchanged this morning, leaving the pairing stuck at a two-week low.
Pound Sterling (GBP) Exchange Rate Buoyed as Service Growth Strengthens
The Pound (GBP) is ticking higher against the Canadian Dollar (CAD) and many of its other peers this morning, following the release of the UK’s latest services PMI.
According to data published by IHS Markit, activity in the UK’s service sector showed a modest improvement in December, with the index climbing from 50.4 to 51.2, beating expectations of a narrow rise to 50.7.
However while the upswing in growth helped to move the UK’s key service sector further away from the point of contraction -which is measured by a reading of below 50- the index suggests that Brexit jitters continue to drag on growth and paints a relatively gloomy picture of the UK economy at the end of 2018, something that will have tempered Sterling’s gains this morning.
Chris Williamson, Chief Business Economist at IHS Markit explains:
‘The service sector typically plays a major role in driving economic growth, but is now showing worrying signs of having lost steam amid intensifying Brexit anxiety.’
‘Combined with disappointing growth in the manufacturing and construction sectors, the meagre service sector expansion recorded in December is indicative of the economy growing by just 0.1%.in the closing quarter of 2018.’
Canadian Dollar (CAD) Exchange Rate Supported by Rising Oil Prices
Meanwhile the Canadian Dollar (CAD) has been able to hold off the Pound’s (GBP) advances this morning thanks to a ongoing rally in oil prices.
Brent Crude pushed back over $57 a barrel earlier today, climbing over 2% since the start of the session on signs that global supply may be slowing.
This comes after members of the Organization of the Petroleum Exporting Countries (OPEC) voted to cut crude production last month after prices collapsed in the fourth quarter of 2018.
However it remains to be see if this be enough to keep the Canadian Dollar buoyed later this afternoon, amid forecasts Canada’s latest employment data may disappoint.
GBP/CAD Exchange Rate Forecast: Brexit Uncertainty to Mire Sterling Sentiment?
Looking ahead to next week’s session, the Pound Canadian Dollar (GBP/CAD) exchange rate may come under pressure once again as GBP investors likely become increasingly skittish ahead of a key parliamentary vote on Theresa May’s Brexit deal in mid-January.
However Sterling may find some relief at the end of the week, with the UK’s latest trade and GDP figures expected to have shown an improvement in November.
Meanwhile the focus for CAD investors is likely to be on Canada’s own trade figures, with the Canadian Dollar potentially facing some pressure if the domestic trade deficit continued to expand in November.