Pound to Canadian Dollar Exchange Rate Weak despite Lack of Support for CAD
Despite a lack of strong support for the Canadian Dollar (CAD), the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is sliding lower this week. Today’s losses have been limited by strength in UK ecostats.
Last week saw GBP/CAD make an impressive jump, from the interbank level of 1.71 to 1.72.
GBP/CAD has struggled to hold its ground and has shed almost half of last week’s gains. The pair still trends in the interbank region of 1.72 at the time of writing on Wednesday however.
Pound (GBP) investors are focused on major upcoming UK data. Meanwhile, the Canadian Dollar is focused on various factors including data, coronavirus uncertainties and oil prices.
Pound (GBP) Exchange Rates Avoid Losses as UK Inflation Beats Forecasts
The Pound has been able to avoid notable losses this week. Hopes of a UK economic rebound persist and keep the currency buoyed.
Markets have been increasingly anticipating the upcoming UK budget. Anticipation has risen on hopes that Britain’s new Chancellor, Rishi Sunak, will make a budget with more government spending that could boost economic activity.
The latest UK data has been fairly solid. It has helped the Pound to hold its ground more easily.
Yesterday’s job market data showed more new jobs made than expected, and today’s inflation stats beat forecasts. Inflation came in with a better than expected -0.3% month-on-month, while the yearly figure rose more than expected from 1.3% to 1.8%.
According to Ruth Gregory, UK Economist at Capital Economics:
‘for the MPC, the fact that inflation is evolving in line with its projections provides another reason not to cut interest rates in the near term.’
Canadian Dollar (CAD) Exchange Rates Fairly Resilient despite Lack of Support
The Canadian Dollar (CAD) has been able to benefit from the Pound (GBP) sliding from its best levels. Investors are hesitant to sell CAD too much, despite a lack of factors supporting it.
Concerns over the coronavirus’ impact on global economic growth have worsened since yesterday. It came in reaction to Apple saying that it was unlikely to meet sales expectations.
As the Canadian Dollar is a trade-correlated currency, this as well as oil prices being kept lower by coronavirus jitters are limiting the currency’s appeal. Mazen Issa, Senior FX Strategist at TD Securities, said:
‘Supply chain disruptions have an impact on global growth. … Is this an environment where CAD can perform? Probably not,’
On top of all this, yesterday’s Canadian manufacturing sales results disappointed investors. These factors are limiting Canadian Dollar appeal, but the currency is still resilient.
Data Remains the Focus for Pound to Canadian Dollar (GBP/CAD) Exchange Rate
Investors are hesitant to sell the Pound (GBP) too much from its best levels due to hopes of a UK economic rebound, and investors are also hesitant to sell the Canadian Dollar (CAD) despite coronavirus concerns.
With GBP/CAD seeing fairly mixed and volatile movement this week so far, the pair could be driven by key ecostats through the end of the week.
If upcoming Canadian data such as today’s inflation stats, tomorrow’s housing figures or Friday’s retail stats beat expectations, the Canadian Dollar could see more resilient strength.
On the other hand, UK growth hopes could strengthen even further if tomorrow’s retail sales results or Friday’s PMI projections beat forecasts.
Developments and speculation over the coronavirus outbreak and its potential impact on global economic growth will also have an influence on the Pound to Canadian Dollar (GBP/CAD) exchange rate in the coming sessions.