The Pound Canadian Dollar (GBP/CAD) exchange rate has weakened this morning following the latest inflation rate data from the UK.
At the time of writing the GBP/CAD pairing are trading around the CA$1.7338 as oil markets become more bearish after a losing streak in the sector over the past few days.
Pound (GBP) Struggles after UK Inflation Softens More-Than-Expected
The Pound has found itself struggling across the board this morning as the latest inflation rate data from the UK revealed that inflation softened more-than-expected during July.
Inflation fell to 2% on the year, missing forecasts of 2.3% and falling for the first time since February.
Jonathan Athow, ONS deputy national statistician for economic statistics commented on the latest data, saying:
‘Inflation fell back in July across a broad range of goods and services, including clothing, which decreased with summer sales returning after the pandemic hit the sector last year. This was offset by a sharp rise in the price of second-hand cars amidst increased demand, following a shortage of new models.’
‘The differing patterns of movement restrictions across the last two years have affected headline inflation. Some of this month’s fall came from products and services, such as foreign travel, where real prices were used last year but have had to be imputed this year.’
Sterling could be open to further losses throughout the day as markets digest the inflation figures and what it could mean for the UK economy moving forward.
Canadian Dollar (CAD) Pushes Higher on Oil Rebound
The Canadian Dollar has found itself making a comeback against the majors as oil prices begin to rebound following a period of setbacks.
The International Energy Agency (IEA) wrote in its monthly report that the delta variant of coronavirus looks to reduce demand for oil:
‘Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use.’
Despite this oil has begun to rebound, which in turn is adding support to the commodity-correlated ‘Loonie’ today.
The Canadian Dollar could find further support this afternoon if the latest inflation rate data from Canada shows that inflation rose during July.
Pound Canadian Dollar Exchange Rate Outlook: Canadian Employment Change in Focus
For Canadian Dollar investors, tomorrow will see the release of the latest ADP employment change figures from Canada for July.
If the Canadian economy added 100k jobs as forecast, then the ‘Loonie’ could see itself pushing higher across the board.
An absence of economic data from the UK will see Pound traders keeping an eye on any domestic coronavirus developments to drive movement in GBP exchange rates tomorrow.