GBP/CAD Exchange Rate Sinks as UK Economy is ‘Unusually Uncertain’ Says BoE
The Pound to Canadian Dollar (GBP/CAD) exchange rate fell by -0.2% today, with the pairing currently trading around CA$1.70.
Sterling suffered following the Bank of England’s (BoE) meeting today, in which the bank held interest rates at 0.1% but sparked concern about Britain’s economy in the months ahead.
The BoE said that the UK’s economic situation remains ‘unusually uncertain’ because of the coronavirus pandemic and uncertainties over Brexit.
The Bank also said that Sterling had been hit by ongoing Brexit developments, saying in its post-rate statement:
‘Indicators of global activity have been broadly in line with the Committee’s expectations at the time of the August MPC meeting.’
‘The Sterling exchange rate index has fallen by around 2%, in part reflecting recent Brexit developments.’
Nevertheless, the Bank of England did have some positive news in the form of saying that British economic data had proved stronger-than-expected.
However, with doubts growing over whether the UK can secure a post-Brexit trade deal with both the US and the EU, the Pound has remained subdued today.
Canadian Dollar (CAD) Rises Despite Worse-Than-Expected Canadian Employment Data
The Canadian Dollar (CAD) edged higher against the Pound (GBP) today despite a worse-than-expected Canadian ADP Employment Change report.
The figure fell to a worse-than-expected -205.4 thousand, despite forecasts of a 901.8 thousand increase.
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said that ‘in in August, the labour market posted a decline in employment with the greatest job losses in construction; trade, transportation and utilities; and manufacturing.’
‘Leisure and hospitality and finance, however, posted job gains for the first time since March 2020.’
Meanwhile, the ‘Loonie’ has come under pressure from falling oil prices, with US crude prices down by -0.9% at $39.81. With oil being Canada’s major export, this has sparked concern over Canada’s economic recovery from the coronavirus pandemic.
Added to this, yesterday’s dovish statement from the US Federal Reserve has also caused concern for Canada’s economy, which is particularly sensitive to signs of a slowing global economy.
GBP/CAD Outlook: Could Souring UK-EU Relations Bring Drag Down Sterling?
Canadian Dollar (CAD) investors will be awaiting tomorrow’s release of the Canadian Retail Sales report for July. If this sinks from 23.7% to just 1%, then we could see the ‘Loonie’ suffer as the nation’s economy continues to struggle.
GBP traders will also be looking to the UK’s Retail Sales report for August. Any improvement in Britain’s retail sector would prove GBP-positive.
Brexit developments will continue to influence the GBP/CAD exchange rate his week. If UK-EU – or UK-US – relations continue to come under strain, then Sterling will fall.