Pound Canadian Dollar Exchange Rate Strikes New 11-Month-Best on Concerning Canadian Data

Pound Canadian Dollar Exchange Rate Capitalises on Weak Canadian Job Stats 

While there has been no fresh upside support for the Pound (GBP), the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has surged to new highs today. The Canadian Dollar (CAD) weakened after poor Canadian job stats from ADP. 

Following last week’s modest but solid advance within the interbank region of 1.75, GBP/CAD has seen a stronger advance this week so far. 

After dipping overnight though, GBP/CAD has been surging again today. At the time of writing on Thursday afternoon, GBP/CAD is trending in the interbank region of 1.77. This is the best level for GBP/CAD in over 11 months, since March 2020. 

If tomorrow’s UK data keeps markets optimistic about Britain’s outlook, the Pound may be in for even further gains against the Canadian Dollar. 

Pound (GBP) Exchange Rates Remain Appealing on Optimistic UK Outlook 

Britain continues to see one of the most optimistic coronavirus recovery outlooks among major economies. 

Britain’s infection rate has plummeted, the nation has met its target to vaccinate 15 million people by the 15th of February, and the government is showing more signs that it is considering the timing of easing lockdown measures. 

Recent UK data has been stronger than expected as well. According to Analysts at MUFG: 

‘We are now assuming no further stimulus will be needed from the Bank of England this year which provides a more favourable backdrop for the pound, but needless to say that remains highly dependent on a stronger UK economic recovery from Q2 onwards.’ 

Canadian Dollar (CAD) Exchange Rates Tumble on Weaker Canadian Job Stats 

This afternoon’s American session saw the publication of Canada’s latest job market report from ADP. 

What was expected to be a fairly modest job report actually saw a shocking –231.2k jobs being lost in January. It followed the 338.2k jobs gained in the previous ADP report. 

Nela Richardson, Chief Economist at ADP, said: 

‘January reported a decrease in jobs, the largest decrease since May 2020 during the lockdown period, 

The surge in COVID-19 cases and public health restrictions resulted in mass layoffs. Job losses were reported in every sector, led by trade, transportation and utilities; leisure and hospitality; and construction.’ 

This poor job report weighed on the Canadian Dollar today. 

Pound Canadian Dollar (GBP/CAD) Exchange Rate Awaits Key Retail Sales Results 

The Pound to Canadian Dollar exchange rate is on track to see notable gains this week. Some of the week’s most notable data is due tomorrow though and could cause a shift in direction. 

UK and Canadian retail sales results will be published throughout tomorrow’s session. If UK retail sales were better than expected in January it could boost hopes for Britain’s economic resilience amid the coronavirus pandemic. 

On the other hand, weaker than expected UK retail stats could worsen concerns about the impact lockdown has had on UK economic activity, which could cause Sterling to shed some of its recent strength. 

Canadian retail sales data could have similar impact on CAD. Strong retail results could help the Canadian Dollar to mount a more sustained recovery from its recent lows. 

Markets are optimistic about UK lockdown easing right now. If the UK government is not as quick on easing lockdown than markets hope, this could also limit Pound Canadian Dollar (GBP/CAD) exchange rate’s potential for further gains. 

Josh Jeffery

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