The Pound Canadian Dollar (GBP/CAD) exchange rate has been supported today following the release of the latest inflation data from the UK for May.
At the time of writing the GBP/CAD pairing are trading around the CA$1.7194 level as Canadian inflation data met forecasts for May.
Pound (GBP) Supported by Rise in UK Inflation
The Pound has seen itself heading higher against many of its counterparts today following a larger-than-expected rise in UK inflation during May.
Inflation rose to 2.1% during May, comfortably above market forecasts of 1.8% and beating the Bank of England’s (BoE) 2% target.
More so core inflation rose to 2%, above market expectations of 1.4%, ING developed markets economist James Smith commented on the rise, saying:
‘UK core inflation leaped to 2% in May, wildly surpassing expectations and marks a considerable jump from 1.3% in April. While an element of this is down to base effects – though more so on the energy side – given the annual comparison compares to the depths of the pandemic, that’s only really part of the story here.’
‘It’s pretty clear reading the details that there is a reopening effect, with the likes of restaurant and hotel prices increasing on the month.’
Canadian Dollar (CAD) Rangebound on Canadian Inflation
The Canadian Dollar has been rangebound for much of the day following the latest inflation rate release from Canada for May.
Inflation in Canada, as measured by the Consumer Price Index (CPI), rose to 3.6% in May from 3.4% in April, data published by Statistics Canada has shown today.
Whilst the rise in inflation did little to cause movement in CAD exchange rates, the commodity-correlated currency has found support in the rise in oil prices recently. WTI crude remains above $72 a barrel, the highest level seen in near three years.
Canadian Dollar investors await the latest economic projections from the FOMC this evening to drive further movement in the currency.
Pound Canadian Dollar Exchange Rate Outlook: Canadian Employment Change in Focus
For Canadian Dollar traders, tomorrow will see the release of the latest ADP employment change figures from Canada for May.
If the figure meets forecasts and the Canadian economy continues to add jobs to the country then the ‘Loonie’ could see itself heading higher.
For Pound investors, Friday’s retail sales figures could give Sterling a boost of fresh support heading into the weekend.
The GBP/CAD exchange rate will continue to be driven by any further coronavirus developments in the coming days.