The Pound to Canadian Dollar (GBP/CAD) exchange rate is heading higher today after a better-than-expected GDP reading from the UK boosted Sterling.
At the time of writing the GBP/CAD exchange rate is trading at around CAD$1.7374.
Pound (GBP) Supported by Unexpected Rise in UK GDP
The Pound has been supported throughout today’s session after the final Q4 GDP reading from the UK was revised higher to 1.3%.
The growth has allowed the UK to avoid a double-dip recession after the coronavirus pandemic wreaked havoc on the nation.
The Office of National Statistics (ONS) reported that the UK’s economy shrank 9.8% over the year, slightly down from initial estimates of 9.9%.
Ruth Gregory, Senior UK Economist at Capital Economics commented on the unexpected growth saying:
‘The upward revision to GDP in the second half of 2020 means the economy does not have quite as far to recover from the COVID-19 crisis. And Q4’s high saving rate leaves plenty of scope for a rapid rebound in 2021, spurred and financed by consumers.’
Sterling continues to be supported by the success of the vaccine rollout across the UK, with over 30 million people receiving a jab, causing investors to remain optimistic over the opening on the UK’s economy in the coming months.
Canadian Dollar (CAD) Steady after US Dollar Pullback
The Canadian Dollar is steady against the Pound today after a pullback in the US Dollar allowed the currency to head higher.
Investors and markets are awaiting a key speech from Joe Biden regarding infrastructure spending where it is expected the President will push for a $2 trillion package to rebuild the country.
The Canadian Dollar has also been supported by an increase in Canadian GDP month-on-month during January.
The Canadian economy expanded 0.7% in January, the figure is the ninth consecutive increase monthly which has continued to offset the steepest drops in Canadian economic activity seen in March and April of 2020 at the start of the coronavirus pandemic.
GBP/CAD Exchange Rate Outlook: UK Manufacturing PMI in Focus
For Pound investors tomorrow will see the release of the latest manufacturing PMI from the UK. The sector is expected to show a growth of 3 points during March.
If the PMI meets forecast it will be the highest levels since the end of 2017, as both Brexit delays and coronavirus lockdown restrictions began to ease.
For Canadian Dollar traders, tomorrow will also see the release of Canada’s manufacturing PMI which is expected show a growth of 0.2, indicating continued growth in the sector which would add further support to CAD.
The GBP/CAD exchange rate will be further driven by the global market mood, if the US Dollar recovers after Joe Biden’s speech then the Canadian Dollar could suffer.