Pound to Canadian Dollar Exchange Rate Holds Gains amid Central Bank Speculation
Hopes for a relatively optimistic tone from the Bank of Canada (BoC) today, has not prevented the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate from sustaining gains in recent sessions. The Pound (GBP) is benefitting as Bank of England (BoE) speculation softens.
The Canadian Dollar’s (CAD) resilient strength has lightened slightly over the past week. As a result, GBP/CAD only slipped slightly to sit on the interbank level of 1.70 last week, and this week so far has recovered all of last week’s losses already.
However, this mixed Canadian Dollar demand comes from brief spots of weakness in global trade. Lingering uncertainty over the Bank of Canada’s policy decision this afternoon is also weighing.
Some of Canada’s recent data was disappointing, but has not had much impact on the market’s BoC outlook. The Pound (GBP), meanwhile, is holding its ground in anticipation of upcoming UK data and next week’s Bank of England decision.
Pound (GBP) Exchange Rates Benefit from Continued Signs of Strength in UK Data
The Pound (GBP) experienced a jump in demand yesterday. Investors reacted to some stronger than expected UK job market stats.
As more new jobs were made than expected, and wage growth was stronger than forecast, investors pulled back slightly on Bank of England (BoE) interest rate cut bets.
Sterling remains steady and appealing today. Investors are hesitant to move much on the currency ahead of Friday’s key UK PMI results, but today’s data offered the British currency a little fresh support as well.
The Confederation of British Industry’s (CBI) latest business optimism index for Q1 2020 rose to 23. The industrial trends orders data for January was a little lighter than expected at -22.
According to Anna Leach, CBI Deputy Chief Economist:
‘Manufacturers are entering the new year with a spring in their step,
Firms are now planning to invest more in plants and machinery, which will ultimately help increase capacity and output.’
Canadian Dollar (CAD) Exchange Rates Pressured by Oil and BoC Uncertainty
While investors are generally optimistic that the Bank of Canada (BoC) will continue to take a mostly positive tone on Canada’s outlook, the Canadian Dollar (CAD) has been unappealing this week.
The Canadian Dollar outlook is mostly strong as well, but a combination of weaker oil prices and BoC uncertainty is keeping pressure on the currency in recent sessions.
Oil is Canada’s most lucrative commodity, so weakening oil prices doused Canadian Dollar appeal.
On top of this, some investors are anxious that markets have been a little too bullish on CAD ahead of the BoC decision.
here is speculation that the BoC could express concern over the strength of the Canadian Dollar, or some signs of weakness in Canadian data. For now, CAD movement is limited as investors await the Bank of Canada news.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Central Bank News and Major Data
The coming week is likely to be highly influential for the Pound to Canadian Dollar (GBP/CAD) exchange rate.
There will be multiple key ecostats from the UK and Canada, and the Bank of England (BoE) and Bank of Canada (BoC) are set to hold policy decisions.
Canadian news and the Canadian Dollar will be the biggest focus over the next day or so.
Key Canadian inflation rate data and wholesale sales stats will be published this afternoon, followed by the anticipated January BoC policy decision.
If the BoC takes a more dovish than expected tone, the Canadian Dollar could see a more notable downward shift for the remainder of the week. Its losses would be even more pronounced if data is disappointing.
Sterling will be more pivotal to GBP/CAD towards the end of the week. Friday will see the publication of UK PMI projections for January, which will give investors a better idea of Britain’s current economic activity and could influence BoE bets.
All focus will be on the Bank of England’s January policy decision next week, which could cause big movement in the Pound to Canadian Dollar (GBP/CAD) exchange rate.