The Pound Canadian Dollar (GBP/CAD) exchange rate has been heading higher this morning as the Pound continues to hold on to its gains following positive PMI figures for May from the UK.
At the time of writing the GBP/CAD pairing are trading around the CA$1.7127 level as markets await the latest employment change data from Canada.
Pound (GBP) Supported by UK Construction PMI
The Pound continues to find support this morning against many of its major rivals as the latest PMI figures bolster Sterling sentiment.
Yesterday saw the fastest growth output in the services sector in 24 years, and this morning has seen the release of a more positive construction PMI for May.
The construction PMI has shown that the UK construction sector has had a stronger recovery, with output growth reaching its strongest level in 7 years.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply commented on the PMI:
‘The construction sector continued its expansion programme with a phenomenal acceleration in growth and the strongest for seven years as new orders filled in at the fastest rate for almost a quarter of a century.’
Canadian Dollar Edges Lower as Markets Await Canadian Employment Data
The Canadian Dollar has weakened against the Pound this morning as markets await the latest Canadian employment change data for May.
Forecasts expect the Canadian economy to have shed 10,000 jobs during May as many Canadian provinces see tighter lockdown restrictions to help combat the coronavirus pandemic.
However a larger-than-expected increase could cause the Canadian Dollar to suffer even further.
However, as reported by Reuters, the Bank of Canada (BoC) is expected to taper its asset purchase programme again next quarter and raise interest rates earlier than expected.
Stephen Brown, senior Canada economist at Capital Economics explained the decision, saying:
‘As the (economic) weakness in the second quarter was caused by the coronavirus restrictions, there is now scope for a stronger rebound in the third quarter as those restrictions are eased, and we continue to expect GDP to return to its pre-pandemic level by August or September.’
Pound Canadian Dollar Exchange Rate Outlook: Coronavirus Developments in Focus
Heading into the weekend, Sterling investors will be focusing on any coronavirus developments in the coming days.
Any further news that the Indian variant of the coronavirus could dampen the UK’s easing out of lockdown would cause the Pound to stutter heading into next week.
Canadian Dollar traders will be keeping an eye on the global market mood over the weekend, a further resurgence in the US Dollar could cause the ‘Loonie’ to stutter further.