Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Suffers Sharp Slump as Oil Prices Rocket and UK Data Fails to Inspire
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate slid last week as some insipid UK data weighed on GBP and a sharp recovery in oil prices boosted the Canadian Dollar.
WTI oil has rocketed over the first week of 2019, showing a 17.2% rise. At the same time the Canadian Dollar has jumped by almost 3% against the Pound, and is currently trading at an inter-bank rate of CA$1.6932.
In terms of recent ecostats, the Canadian Dollar managed to hold onto its gains against the Pound despite Canada’s Markit manufacturing PMI falling from 54.9 to 53.6 in December.
Christian Buhagiar, President and CEO at SCMA noted that:
‘December data signalled a loss of momentum for manufacturers at the end of the year, with stagnating export sales and softer energy sector demand the key factors behind an overall slowdown in production growth Survey respondents also commented that global trade tensions has led to greater risk aversion among clients.’
Adding fuel to the explosive pace of the CAD exchange rates was Canada’s latest employment figures, which impressed investors as the nation added more positions than expected and the unemployment rate held steady despite a forecast that it would rise.
CAD/GBP Exchange Rate Gains Limited by Lacklustre Canadian Trade Figures
Data released this afternoon revealed that Canadian imports and exports were both down in November, with the significant International Merchandise Trade numbers also coming in below expectations.
Canada’s struggling oil and gas industry may have contributed to exports dipping at $48.33bn on the month, compared to $49.77bn the month before.
The fall in oil exports was likely due to a supply constriction that was preventing shipping – although this problem has now mostly been solved as oil shipments by rail have increased to compensate for the pipeline restrictions.
The effect has been to slow the Canadian Dollar’s (CAD) ascent against the Pound (GBP), although the pairing is currently trading down -0.4% on the day.
Brexit Returns: Pound to Canadian Dollar (GBP/CAD) Exchange Rate Likely to be driven by Politics over Coming Week despite Bank of Canada Rate Meeting
This week focus returns once again to Brexit as the UK Parliament reconvenes after the winter break and plunges straight into debating Prime Minister Theresa May’s EU withdrawal agreement.
With Sterling sensitive to any signs that a no-deal Brexit scenario could ensue, traders will likely be analysing the chances of such an occurrence; as it stands, May’s Brexit agreement has little chance of passing a Commons vote among MPs on 15 January.
At the same time, the Bank of Canada (BoC) is due to meet on Wednesday to set interest rates.
Current expectations are that there will be no change to Canadian rates, leaving GBP/CAD traders to anticipate Friday’s UK November GDP growth figures instead.
It is estimated that the monthly figure will come in at 0.1%, although anything above this will likely prove to be a pleasant surprise for Sterling investors, and would no doubt give the GBP/CAD exchange rate a boost.