Pound to Canadian Dollar (GBP/CAD) Exchange Rate Slides despite Lack of Canadian Dollar Demand
UPDATE: Before markets close on Friday afternoon, investors have continued to sell the Pound against the Canadian Dollar (GBP/CAD).
Despite this, the Pound’s strong performance earlier in the week meant that the pair was still on track to end the week much higher.
The Canadian Dollar’s rebound was driven largely by slightly stronger demand for risk-correlated currencies, but amid a lack of supportive Canadian data the currency’s gains were limited.
Pound to Canadian Dollar Exchange Rate Slips on Brexit Uncertainty and Trade Sentiment
Despite a lack of solid domestic support for the Canadian Dollar this week, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate recoiled slightly from its best levels this morning as Brexit uncertainty weighed on Sterling (GBP).
Since opening this week at the interbank level of C$1.73, GBP/CAD has gained almost a cent and a half. Yesterday, GBP/CAD even briefly touched on its best level since early-April, C$1.75.
At the time of writing on Friday morning though, GBP/CAD is trading a little down from those best levels as investors pull back slightly on the Pound following a week of gains on Brexit speculation.
The Canadian Dollar (CAD), on the other hand, has rebounded slightly following days of poor performance in risk-correlated currencies, though it lacks the drive to recover too far due to underwhelming data this week.
Pound (GBP) Exchange Rates Slide Back on Brexit Uncertainty and Poor UK Services Data
The Pound to Canadian Dollar (GBP/CAD) exchange rate has risen this week, but while the Pound (GBP) has sustained gains the advance has been largely due to market speculation that a softer Brexit could be reached through compromise.
With the week drawing to an end and no solid developments in negotiations between the UK government and opposition Labour Party, investors are becoming doubtful that there will be solid progress before the EU elections later this month.
This is making it difficult for the Pound to sustain its best levels, and investors are selling it from its highs this morning.
On top of ongoing Brexit uncertainty, the Pound saw additional pressure this morning as Britain’s April services PMI report from Markit fell short of forecasts.
The services PMI was expected to rebound from 48.9 to 50.5 in April, but instead only rose to 50.4.
Canadian Dollar (CAD) Exchange Rate Stays off Lows on Economic Hopes
Despite some poor data weighing on the ‘Loonie’ and Canada’s economic outlook, as well as falling oil prices, CAD has been able to hold away from its worst levels this week.
Canada’s key February growth rate report printed an unexpected contraction on Tuesday, and Wednesday’s April manufacturing PMI similarly fell into contraction on Wednesday.
On top of this, oil, Canada’s most lucrative commodity, has been weakening due to rising US oil production and supplies.
However, the Canadian Dollar has been able to edge away from its lows today regardless.
Comments from Bank of Canada (BoC) Governor Stephen Poloz that interest rates would still be hiked once economic headwinds subside, as well as general higher demand for trade-correlated currencies on Friday, helped the Canadian Dollar to rebound slightly.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Investors Await More Canadian Data
Much of the Canadian Dollar’s (CAD) resilience this week was spurred by hopes that signs of slowdown in Canada’s economy were temporary.
Bank of Canada (BoC) Governor Stephen Poloz has signalled that Canadian interest rates will continue to rise if Canadian economic headwinds subside, meaning investors will be anticipating next week’s Canadian data for further economic signals.
With many markets closed on Monday to observe bank holidays, the economic calendar is quiet, although investors may react to an evening speech from BoC Governor Stephen Poloz.
Canadian Ivey PMI data due on Tuesday, trade data on Thursday and job market stats on Friday are the reports that are most likely to influence interest rate hike bets.
Pound investors, on the other hand, will remain focused on Brexit developments. If cross-party Brexit negotiations seem more likely to fail, the Pound to Canadian Dollar (GBP/CAD) exchange rate will be more likely to weaken again.