Pound Canadian Dollar (GBP/CAD) Exchange Rate Lifts as Canadian Dollar Sentiment Falls
The Pound (GBP) has risen against the Canadian Dollar (CAD) this morning as CAD investors strike a bearish tone ahead of Canada’s data release this afternoon. Election concerns also weigh upon the ‘Loonie’, alongside falling oil prices.
At the time of writing, GBP/CAD is trading at CA$1.7381, advancing towards a weekly high.
Canadian Dollar (CAD) Falls on Bearish Sentiment, Falling Oil Prices
The Canadian Dollar is trending down against the majority of its peers today on account of a host of factors.
Canadian data is expected to print mixed this afternoon, with Manufacturing Sales looking to show an expansion in June, while a contraction in wholesale sales – although a low-impact release – points to a slower economic recovery.
A snap election has been called, meanwhile, by Canadian Prime Minister Justin Trudeau. Canadians will head to the polls on 20 September, with Trudeau expected to win a majority of votes.
This is widely considered good news for the ‘Loonie’, demonstrating a positive public consensus that does little to threaten risk-off sentiment. However, some are arguing that it’s too early for an election, and Trudeau’s attempt to garner support could backfire.
‘The reality is that Canadians are just getting their first break from the pandemic,’ said Nikita Nanos, chief data scientist and founder at Nanos Research. There’s just not a lot of enthusiasm for an election at this particular point in time.’
Aside from these two stimuli, prices of WTI crude oil have dropped, inevitably weighing upon CAD sentiment.
Analysts this morning predicted that WTI could slip back to $65.00 per barrel, testing July-August lows following the International Energy Agency (IEA)’s warning on the surge in Covid infections.
Pound (GBP) Finds Support Despite Rising Covid Cases
The Pound has managed to sustain an upturn against the Canadian Dollar despite bearish trading as a result of coronavirus concerns. On Saturday, 29,520 new infections and 93 deaths were reported, whereas this time last week the figures were 27,429 cases and 39 deaths.
Despite this, the Pound has found some stable footing. The Bank of England (BoE)’s hints about modest tightening the week before last extended support, while a raised inflation forecast at the August policy meeting endorsed market expectations for a rate hike in 2020.
Brexit concerns seem to have quietened for the time being, also giving the Pound an opportunity to rally.
As today lacks any UK data releases, the Pound is likely to trend upon sentiment alone. If investors sense alarm at the prospect of newly rising Covid cases, there’s a possibility that GBP could come under pressure against the Canadian Dollar.
Pound Canadian Dollar Exchange Rate Forecast: Investors Look to Employment and Inflation Data
Tomorrow’s UK employment data could turn GBP’s trajectory around if unemployment remains the same, or increases upon last month. However, the benefit claimant count is set to fall by 180k, which is more likely to support the Pound.
Wednesday’s inflation data for Canada looks promising, with a consensus estimate that it’ll reach 3.4%. This should strengthen the Bank of Canada (BoC)’s assessment of economic recovery despite ongoing coronavirus concerns. Meanwhile, UK inflation looks to fall, denting GBP prospects.
Mixed predictions and interpretations mean either currency has potential to rebound in the week ahead.