Pound Canadian Dollar (GBP/CAD) Exchange Rate Weakens, Oil Prices Supported by Chinese Data
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate is currently trading at an inter-bank rate of CA$1.6351, down 0.4% on the day’s opening levels.
On Monday oil prices edged up slightly following better-than-expected Chinese retail sales and industrial output.
Year-on-year retail sales jumped by 9.8% while industrial production rose by 6.3%.
Oil gains were capped slightly however by disappointing Chinese economic growth data, which likely weighed on the ‘Loonie’.
US-China trade tensions caused China’s growth to slow to 6.2% in the second quarter, its weakest level since 1992.
Commenting on the data, Chinese Government Spokesman, Mao Shengyong stated:
‘Economic conditions are still severe both at home and abroad, global economic growth is slowing down and the external instabilities and uncertainties are increasing.
‘The economy is under new downward pressure.’
Sterling (GBP) Exchange Rates Struggle as Brexit Pessimism Hits Housing Market
Meanwhile, Sterling remained under pressure as Rightmove revealed UK housing asking prices fell by -0.2% in July.
This was the first time this year asking prices have slumped, as buyers’ confidence took a hit as Brexit uncertainty persisted.
Commenting on the data Rightmove Director, Miles Shipside noted:
‘The housing market fundamentals remain largely sound in many parts of the country, but the current political climate means that the crucial ingredient of confidence has been impaired, and that is causing some potential buyers and sellers to hesitate.’
BoE could Cut Rates to Zero in Case of No-Deal Brexit
Demand for the Pound (GBP) remains limited following last week’s comments from Bank of England (BoE) official Gertjan Vlieghe, who stated that the bank may need to cut rates to zero in the event of a no-deal Brexit.
During a speech, one of the bank’s nine interest rate setters noted:
‘On balance I think it is more likely that I would move to cut Bank Rate towards the lower bound of close to 0% in the event of a no-deal scenario.
‘It is highly uncertain when I would want to reverse these interest rate cuts.’
Meanwhile, he also noted that if the UK left the EU with a deal, the bank could raise interest rates by 1% in a year, 1.25% in tow and then 1.75% in three years’ time.
However, these increases would depend largely on the global economy recovering from the current slowdown.
Pound Canadian Dollar Outlook: CAD Could Gain after CPI Data
Looking ahead to Tuesday, the Pound (GBP) could rise against the Canadian Dollar (CAD) following the release of UK average earnings data.
If average earnings rise in the three months to May, Pound Sterling exchange rates could climb.
However, the Canadian Dollar could fight back on Wednesday following the release of the Bank of Canada’s (BoC) Core Consumer Price Index (CPI).
If Canadian inflation rises higher than forecast in June CAD exchange rates could rally.