Pound Canadian Dollar (GBP/CAD) Exchange Rate Sinks as Canadian Growth Hopes Renew

GBP/CAD Exchange Rate Falls on Bullish Canadian Growth Forecasts

The Pound Canadian Dollar (GBP/CAD) exchange rate is down around 0.7% today and is currently trading around CA$1.6965 on the inter-bank market.

The Canadian Dollar (CAD) rose against the Pound (GBP) following renewed hopes that Canada’s GDP figures could rebound to around 2% in the second half of the year.

The Organisation for the Economic Cooperation and Development (OECD) said:

‘Exports will strengthen in response to an easing in Alberta’s mandatory oil production cuts and higher export market growth. Business investment will rise as firms move to increase capacity and productivity and in response to new tax incentives. Employment growth is on course to slow, but the unemployment rate should remain near record lows.’

Today will see the publication of the Canadian retail sales figures for March, which are expected to increase to 1.0% from February’s 0.8%.

US-China tensions, however, are holding back some of the ‘Loonie’s gains, as Canadian Prime Minister, Justin Trudeau, has called against Chinese ‘aggression’, following the arrest of two so-accused spies in Beijing.

Trudeau said:

‘China is making stronger moves than it has before to try and get its own way on the world stage.’

GBP/CAD Exchange Rate Sinks as MPs Reject PM’s ‘New’ Brexit Deal

The Pound, meanwhile, has weakened following Theresa May’s speech yesterday in which she outlined her ‘new’ Brexit deal, however this fell on hostile ears, with MPs rejecting her option of a second referendum should her deal pass through Parliament in June.

Theresa May said:

‘The majority of MPs say they want to deliver the result of the referendum… and I believe there is now one last chance to do that.’

Meanwhile, the Environment Secretary Michael Gove has refused to confirm that a Brexit vote would go ahead in early June, saying instead that it was time to reflect on May’s ‘new deal’.

Today saw the publication of the annual UK consumer price index figures for April, which increased to 2.1% against March’s 1.9%, exceeding the Bank of England’s 2% target.

Suren Thiru, Head of Economics at the British Chambers of Commerce, warned of a drag on the UK economy, saying:

‘Rising inflation alongside slowing wage growth is a concern, as it squeezes real household incomes. If this trend continues, it could well choke off the recent improvement in consumer spending, a key driver of UK growth.’

Pound Canadian Dollar Outlook: Sterling Could Sink Further on Brexit Deal Rejections

Canadian Dollar traders will be looking ahead to tomorrow’s publication of the Canadian wholesale sales for March, which are expected to improve against the previous month.

Pound investors, meanwhile, will be focusing on political developments as there are no notable economic data releases until Friday.

The Pound Canadian Dollar exchange rate could fall further if Theresa May’s ‘new’ Brexit deal is increasingly rejected by MPs, throwing the UK into political turmoil as no-deal fears mount.

 

David Moore

Contact David Moore


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