GBP/CAD Exchange Rate Rises as Canadian Market Confidence Slips despite Bullish BoC
The Pound Canadian Dollar (GBP/CAD) exchange rate is up today and is currently trading around CA$1.750 on the inter-bank market.
The Canadian Dollar (CAD) fell against the Pound (GBP) despite the Governor of the Bank of Canada (BoC), Stephen Poloz, saying during a speech that he expects the Canadian economy to accelerate in the second half of the year.
Mr Poloz said:
‘From our point of view, revenues are higher than projected and that’s another sign that the economy is doing well and that the market is doing well because it’s generating revenues.’
Many ‘Loonie’ traders, however, have felt that Poloz’s remarks were too optimistic, and today market confidence in the Canadian Dollar has begun to show signs of slipping.
Yesterday’s Canadian GDP figures revealed that the economy contacted by 0.1% in February, alarming CAD investors who had expected to see a small expansion.
The Pound, meanwhile, benefited from better-than-expected Markit manufacturing PMI figures for April today, which came in at 53.1 instead of the forecast 53.0. Nevertheless, this still represented a slowdown in Britain’s manufacturing sector.
Rob Dobson, Director at IHS Markit, said Brexit was likely responsible for the contraction, stating:
‘Brexit uncertainty continues to weigh on plans, as some firms remain concerned about future growth prospects and the likely impact on output and demand from the unwinding of inventory positions later in the year.’
GBP/CAD Exchange Rate Edges Higher on Renewed Brexit Optimism
Sterling (GBP) has benefited from increased Brexit optimism following Prime Minister Theresa May’s comments yesterday that she expects cross-party talks to conclude by the end of next week.
Today Mrs May will be facing PMQs in the House of Commons, amid rumours that she is willing to strike a deal with the Labour Party over her UK-EU withdrawal agreement.
Meanwhile the Labour Party has agreed to include the option of a second referendum – with various caveats – in its manifesto for the upcoming European elections.
CAD/GBP Exchange Rate Jumps as Traders Await Canadian Manufacturing PMI Figures
Many ‘Loonie’ (CAD) traders will be awaiting the Canadian Markit manufacturing PMI figures for April, which are expected to rise.
Stephen Poloz, the BoC Governor, is set for another speech this evening, and with any further bullish comments about the Canadian economy, this could provide some uplift for the CAD/GBP exchange rate.
With the Canadian economy being particularly sensitive to global economic developments, many CAD traders will be focusing on US-China trade talks, which have kicked off today amongst increasing hopes of a trade deal emerging between the two superpowers.
The US White House Chief of Staff, Mick Mulvaney, has commented that he believes US-China trade talks could be resolved ‘one way or the other’ in a little under two weeks.
GBP/CAD Outlook: BoE Interest Rate Decision in the Spotlight
Pound traders will be looking ahead to tomorrow’s interest rate decision by the Bank of England, which is expected to remain static at 0.75%.
Tomorrow will also see the BoE’s Mark Carney deliver a speech, and with any signs of dovishness about the state of the UK economy due to Brexit, this could see Sterling weaken.
There are no Canadian economic data releases due tomorrow, with most ‘Loonie’ traders instead focusing on geopolitical developments between the US and China.
The Pound Canadian Dollar (GBP/CAD) exchange rate will remain sensitive to developments surrounding the cross-party talks, and with their conclusion imminent, any signs of a consensus between the two parties would benefit Sterling.