Pound Canadian Dollar Exchange Rate Weighed as Brexit Uncertainties Rattle Analysts
Despite today’s UK growth rate report beating expectations, the Pound Canadian Dollar (GBP/CAD) exchange rate continues to tumble. The Canadian Dollar (CAD) has been advancing since the middle of the week as it benefits from the market’s risk-on mood.
GBP/CAD opened this week around the interbank level of 1.75, when Canadian Dollar strength briefly pushed it down to lows of 1.74.
Sterling (GBP) saw stronger demand in the first half of the week taking the pair almost a cent higher, but the Canadian Dollar saw another rise in demand towards the end of the week.
At the time of writing on Friday, GBP/CAD is trending nearer the week’s opening levels again after giving up its gains. This of course put the pair closer to this week’s lows, which were the lowest GBP/CAD levels since early February.
Next week’s economic calendar is busier, with Canadian inflation and retail stats due, as well as the Bank of England’s (BoE) March policy decision.
Pound (GBP) Exchange Rates Weighed by Fresh Signs of Post-Brexit Trade Woes
Today saw the publication of a slew of UK ecostats from January. While UK growth beat forecasts overall, this was not enough to make the Pound more appealing and extend its rally.
This is because other aspects of today’s UK data were seen as cause for concern from analysts. The UK manufacturing and industrial production results fell short of expectations, and the latest trade data showed worse than expected issues regarding post-Brexit UK-EU trade.
A huge record drop in trade between the UK and EU in January, the first month that the UK traded outside of EU rules, was a concerning sign to economists. Analysts said the data indicated that there was more to UK-EU trade issues than mere adjustment period issues.
Canadian Dollar (CAD) Exchange Rates Strong Ahead of Key Job Market Report
The Canadian Dollar has had a fairly good week. Being among the risky trade-correlated currencies to benefit most from the risk-on movement over the past week, it continues to trend near its best levels in over a month against the Pound.
The Bank of Canada (BoC) took a fairly upbeat tone in its policy decision on Wednesday. No big surprises, but enough to keep Canadian Dollar investors generally optimistic.
Softening Federal Reserve tightening speculation and continued strength in key commodities like oil also supported demand for the Canadian Dollar.
For now, the Canadian Dollar is resilient as markets hope for relatively optimistic job market data from Canada this afternoon.
Pound Canadian Dollar (GBP/CAD) Exchange Rate Could Fall Further on Canadian Job Market Report
The already strong Canadian Dollar could receive a further boost in demand if upcoming Canadian data impresses. Canada’s February job market report will be published during today’s American session.
After a dire report in January, analysts are cautiously optimistic for signs of recovery from February’s data. According to Analysts at TDS:
‘We look for job growth of 150K in February as the rollback of emergency measures across Eastern Canada facilitates a rebound for industries heavily affected by recent lockdowns. Part-time employment should lead job growth which will translate into more modest growth in hours worked, while the unemployment rate should drift lower to 9.0% (on higher participation).’
This could cause some more GBP/CAD movement before markets close for the week.
Looking ahead to next week, more key Canadian data such as retail sales and inflation results could drive the Canadian Dollar, alongside oil price and risk movement of course.
As for the Pound, the big focus for next week will be the Bank of England’s (BoE) March policy decision. If the bank takes a more dovish tone on the UK economy than expected, the Pound Canadian Dollar (GBP/CAD) exchange rate could fall even lower.