GBP/CAD Exchange Rate Slips as Canadian Employment Growth Beats Expectations
Updated The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate traded lower on Friday afternoon, slipping around half a cent to CA$1.7526 following the release of Canada’s latest labour report.
The report revealed that employment growth remained solid last month, rising by 55,900 and easily beating forecasts that there would be no discernible change in employment in February.
— Statistics Canada (@StatCan_eng) March 8, 2019
However, slightly tempering the ‘Loonie’s gains was a sharp fall in crude prices on Friday, after Norway’s wealth fund announced it would stop investing in oil and gas producers.
GBP/CAD Exchange Rate Holds onto Gains Following BoC Rate Decision
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is consolidating its gains this morning after surging over a cent on Wednesday following the Bank of Canada’s (BoC) latest policy meeting.
At the time of writing the GBP/CAD exchange rate is virtually unchanged, leaving the pairing close to a 10-month low.
Canadian Dollar (CAD) Exchange Rate Sinks after BoC Warns of Rate Uncertainty
The Canadian Dollar (CAD) is stuck at multi-month lows against the Pound (GBP) and most of its other peers this morning as the currency continues to reel from the Bank of Canada’s latest rate decision.
While the BoC made no changes to its monetary policy as it concluded its March meeting on Wednesday, the bank adopted a notably more dovish tone than in previous meetings.
This saw the BoC acknowledge that the economic slowdown at the end of 2018 had proved to be worse than expected, partly in relation to a drop in global oil prices but also due to broader weakness in Canada’s economy.
The highlight was the bank’s forward guidance on interest rates however, with the Canadian Dollar plummeting after the BoC warned of greater uncertainty over the timing of future rate hikes.
The BoC’s policy statement read:
‘Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook.
‘With increased uncertainty about the timing of future rate increases, Governing Council will be watching closely developments in household spending, oil markets, and global trade policy.’
Pound Sterling (GBP) Exchange Rates Flat Amid UK-EU Brexit Stalemate
Meanwhile the Pound (GBP) is trading in a narrow range this morning as markets remain wary of the currency in the face of the ongoing stalemate between the UK and EU over the Irish backstop issue.
The latest round of talks concluded without a breakthrough on Wednesday, with the EU’s Chief Brexit negotiator Michel Barnier stating that there was still ‘no solution’ to the backstop issue.
This is likely to dampen any hopes that Theresa May’s withdrawal deal will make it through Parliament in a vote next week.
While this may lead to MPs backing a delay to Brexit in a subsequent vote, this has already been largely priced in by investors, so any upside to Sterling appears limited.
GBP/CAD Exchange Rate Forecast: Disappointing Employment Data to Drive Further Losses in the ‘Loonie’?
Looking ahead, the Pound Canadian Dollar (GBP/CAD) exchange rate may continue to trend higher on Friday following the release of Canada’s latest employment figures.
Economists forecast that employment growth will have dried up last month, with Canada’s workforce expected to have stagnated in February after swelling by 66,800 at the start of the year.
Meanwhile the Pound is likely to become increasingly sensitive to political and Brexit developments over the next few days in the run up to Tuesday’s vote.