GBP/CAD Exchange Rate Sinks as Canadian Wholesale Sales Improve
The Pound Canadian Dollar (GBP/CAD) exchange rate eased today and is fluctuating around CA$1.6763.
The Canadian Dollar (CAD) edged higher against the Pound (GBP) following the release of the Canadian monthly wholesale sales figures for April, which came in at a better-than-expected 1.7% –beating the forecast of 0.2%.
This has further bolstered optimism on the expectation that the Bank of Canada (BoC) will hold off on rate cuts.
Alvise Marion, a Strategist at the Investment Bank Credit Suisse, said:
‘If the data hold[s] up in Canada, there is space for the Canadian Dollar to outperform against other G10 currencies.’
Meanwhile, oil prices balanced today with concerns over declining crude demand due to increased risks of US sanctions on Iran.
As the Canadian Dollar (CAD) is directly correlated to the price of crude oil – with Canada being one of the largest global suppliers – many traders are remaining poised for a possible oil-driven break.
Tamas Varga, an Analyst at PVM, however, remained cautious, saying:
‘The geopolitical risk premium [in the Middle East] is partly offset by another stand-off, namely between the U.S. and China… The likely failure to reach a mutually acceptable trade agreement will raise demand concerns that will dishearten oil bulls.’
Poor Retail Sales Weaken GBP/CAD Exchange Rate, No-Deal Brexit Fears Rise
The Pound (GBP) failed to hold on to its gains following the printing of the UK CBI Distributive Trades Survey figures for Jun, which fell below the forecast -10 to -42%.
Alpesh Paleja, a Principal Economist at CBI, however, said:
‘This month’s drop in sales should be taken with a pinch of salt, given the backdrop of last June’s heatwave and the start of the World Cup.’
Political developments have remained in focus, however, with Boris Johnson returning to the media spotlight following recent personal revelations.
Brexit uncertainty has risen, however, as Mr Johnson, who is the current favourite for the Britain’s next Prime Minister, pledged that the UK will leave the EU ‘do or die’ on 31 October.
Many Sterling traders have become increasingly skittish on Johnson’s insistence on pushing for a Hard Brexit.
Mr Johnson urged positivity, however, saying:
‘Let’s be more positive about this. It’s time this country stopped being so down about its ability to get [Brexit] done.’
GBP/CAD Outlook: Easing US-China Trade Tensions Could Benefit ‘Loonie’
Pound (GBP) traders are looking ahead to tomorrow’s speech by Mark Carney, the Governor of the Bank of England.
Any further dovish comments about the state of the UK’s economy would prove Pound-negative.
Tomorrow will also see the Treasury Committee’s inflation report hearings.
UK political developments will remain in the spotlight, with the Tory leadership race heating up now that Boris Johnson returned to centre stage.
Canadian Dollar investors, meanwhile, will be focusing on global political developments surrounding the US-China trade talks.
As the Canadian economy is heavily reliant on global trade, any signs of easing tensions between the two superpowers would likely benefit the CAD/GBP exchange rate.