Pound to Canadian Dollar Exchange Rate Edges Higher Ahead of Key Data
The Pound’s (GBP) poor performance this week left the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate far lower. This is despite oil price weakness and Canadian data concerns limiting the Canadian Dollar’s (CAD) appeal all week.
Since opening this week at the interbank level of 1.74, GBP/CAD has seen significant losses as hard Brexit fears return.
GBP/CAD has been able to hold above this week’s lows of 1.71 and currently trends in the region of 1.72. However, the pair has shed almost all of last week’s impressive gains, showing that Sterling’s Bank of England (BoE) rally has largely reversed.
For now, Pound to Canadian Dollar exchange rate investors are awaiting today’s upcoming Canadian job market report. This data could boost CAD support if it beats forecasts.
Pound (GBP) Exchange Rates Remain Under Pressure as Hard Brexit Fears Overshadow
The Pound (GBP) saw significant losses across the board this week due to revived Brexit fears. Tough stances taken by UK and EU officials mean markets once again fear that 2020’s Brexit transition period could end with a hard Brexit.
Hard Brexit fears persisted throughout the week. They bubbled up again on Wednesday amid reports that the EU could weaken the City of London as a financial centre.
Persisting fears meant the British currency failed to sustain gains from the latest stronger than expected UK data.
Domestic PMIs beat projections and boosted hopes of a rebound in economic activity. However, market jitters over the future relationship between the UK and EU ultimately overshadowed these hopes.
Canadian Dollar (CAD) Exchange Rates Advance despite Poor Oil Prices
Partially due to the Pound’s (GBP) broad weakness, the Canadian Dollar (CAD) has been able to sustain considerable gains this week.
The Canadian Dollar is often correlated to commodity sentiment. Much of the currency’s recent weakness has been a result of oil prices being kept low by coronavirus concerns. This is because oil is Canada’s biggest export.
However, the Canadian Dollar still saw decent gains even as oil prices remained poor.
CAD demand was boosted by higher market risk-sentiment as coronavirus jitters soften slightly, as well as hopes for a stronger Canadian economic outlook.
Market hopes in Canada’s economic outlook are currently quite strong, so an interest rate cut from the Bank of Canada (BoC) is not currently expected.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Canada’s Job Market Report
The Pound (GBP) could remain under pressure until next week. Hard Brexit jitters continue to keep a lid on the currency’s appeal.
Unless there are some surprising Brexit developments today, the Pound to Canadian Dollar (GBP/CAD) exchange rate’s late-week movement is likely to be driven by the Canadian Dollar (CAD).
This afternoon’s Canadian job market report is likely to be the week’s most influential Canadian dataset.
If the data comes in stronger than forecast, the Canadian Dollar could find some stronger support and advance. This could boost CAD even if oil prices remain weak.
In fact, even if Canada’s job market report disappoints investors it may only have a limited impact on CAD, as investors are confident that the Bank of Canada (BoC) will avoid a rate cut any time soon.
Looking ahead to next week, developments in Brexit and coronavirus as well as major UK data will drive the Pound to Canadian Dollar (GBP/CAD) exchange rate.