Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rebounds on Unexpectedly Poor Canadian Growth Stats
UPDATE: This morning, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate tumbled as oil prices drove the Canadian Dollar (CAD) higher.
However, during the American session GBP/CAD rebounded and surged, trending nearer its 2019 highs once again in reaction to the latest Canadian data.
Canada’s Q4 Gross Domestic Product (GDP) growth rate slumped to just 0.1% quarter-on-quarter, as December’s monthly print unexpectedly contracted at -0.1%.
The disappointing data led to a Canadian Dollar slump, making it easier for GBP/CAD to sustain most of this week’s impressive gains.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Slides as Oil Prices Support ‘Loonie’
ORIGINAL: While the Pound (GBP) saw steadier movement against most major currency rivals today, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has been tumbling further from its weekly highs due to fresh demand for the Canadian Dollar (CAD).
Despite these losses, GBP/CAD is still on track to have sustained massive gains this week. GBP/CAD opened the week at the interbank level of C$1.71 and at one point had soared over four cents and touched an 8-month-high of C$1.75.
Since then GBP/CAD has slipped back, but the pair is still on track to have gained over two cents throughout the week.
The Pound sustained most of its weekly gains as no-deal Brexit fears lightened, but stronger prices of commodities like oil helped support the relatively risky trade-correlated Canadian Dollar.
Pound (GBP) Exchange Rates Continue to Slip on Weak Manufacturing Stats
Investors sold the Pound (GBP) back from its best levels in profit-taking yesterday, but while the British currency’s movement steadied slightly today the currency still slipped versus some more appealing rivals due to underwhelming UK data.
Britain’s February manufacturing PMI was published this morning and, as expected, the data slowed to just 52. The previous figure was also revised lower to 52.6, indicating that Britain’s manufacturing sector was less healthy than expected.
According to Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply:
‘In summary, the march of the makers has turned into a painful crawl where only certainty about the Brexit way forward can ease the sector’s pain.’
As Brexit uncertainties were partially to blame for the manufacturing slowdown, the news had little downside impact on the Pound.
This is because since this week’s Brexit developments, markets are increasingly betting against a no-deal Brexit amid hopes that UK MPs will vote against the possibility during a parliamentary vote on 12 March.
Canadian Dollar (CAD) Exchange Rates Strengthen on Strong Oil Prices
The Pound’s Friday losses were modest against most major currencies, but the Canadian Dollar (CAD) was a little stronger and pushed GBP/CAD down around 0.4%.
Investors found the risk sensitive Canadian Dollar more appealing thanks to rising oil prices.
Oil production cuts led by OPEC left made the commodity more appealing, which in turn bolstered risk-sentiment and demand for the Canadian Dollar.
This was despite a lack of strong Canadian data in recent sessions. Inflation fell short of expectations in January, and the nation’s latest raw materials and PPI stats were disappointing as well.
As well as oil prices, investors firmed on the Canadian Dollar in anticipation of upcoming growth stats.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Investors Anticipate Canada Data and Brexit News
The Pound to Canadian Dollar (GBP/CAD) exchange rate is tumbling today, but the pair’s losses could be even deeper if upcoming Canadian data impresses investors.
Friday’s American session will see the publication of Canada’s Q4 Gross Domestic Product (GDP) growth rate results, as well as growth figures from December. If they impress investors the Canadian Dollar (CAD) could see stronger performance before markets close for the week.
Still, the strong GBP/CAD gains of recent sessions are unlikely to be wiped out unless the Pound (GBP) sees a steeper plunge.
The Pound’s recent gains have been due to Brexit hopes, but a no-deal Brexit remains on the table. As a result, Sterling is still sensitive to potential surprise Brexit developments.
GBP investors will continue to watch UK politics carefully, while CAD traders will look ahead to next week’s Canadian trade stats and Bank of Canada (BoC) policy decision following today’s growth results.
If Brexit uncertainties worsen again and upcoming Canadian data is strong, the Pound to Canadian Dollar (GBP/CAD) exchange rate could shed some of the past week’s impressive gains.