Pound Canadian Dollar (GDB/CAD) Exchange Rate Slips Despite Canadian GDP Growth as Fishing Dispute Escalates

GBP/CAD Exchange Rate Falls Amid Positive GDP Growth Returns

(Updated 15:30, 29/10/21 )

The Pound Canadian (GBP/CAD) exchange rate has dropped slightly as the market responds to the latest GDP rates for Canada. The results show that the Canadian economy expanded 0.4% for the period of August 2021. Among the twenty sectors in Canadian industry monitored for GDP growth, fifteen showed growth with accommodation and food & drink services leading the surge.

Despite failing to meet market meet market expectations, the Canadian Dollar has seen a boost in the afternoon session and may continue to be influenced by these returns for the rest of the day.

The Pound (GBP) has continued to show little movement today as the fishing row between France and the UK has rumbled on throughout today’s trading session.

Original article continues below:

GBP/CAD Exchange Rate Steady Before Canadian GDP Figures 

There has been little significant movement in the Pound Canadian Dollar (GBP/CAD) exchange rate today. GDP growth data from Canada is expected this afternoon with a forecast rise that may prompt an uptick in the Canadian Dollar. 

Brexit and budget tensions continue to influence investor confidence in the Pound, which has moved little over the course of the morning. 

Pound (GBP) Languishes as Fishing Row Escalates Further 

The Pound (GBP) has traded in a narrow range this morning, as escalation in the row over fishing rights between France and the UK continues to affect market confidence. 

The dispute between the two nations has been thrown further into the spotlight this week, as French officials seized a trawler boat operating in French territorial waters. 

Talks are expected to take place today after the French ambassador to London was summoned to explain the actions of the French government. France has previously stated that further action will be taken against British vessels if more French trawlers are not granted access to UK waters. 

Both countries stand to lose face over the issue. President Macron will be seeking to defend coastal interests ahead of an April election, whereas UK Prime Minister Boris Johnson campaigned heavily on the issue of fishing rights during the EU referendum and will also be looking to appear strong on the issue. 

The row may continue to influence the Pound’s movements as the day goes on, and government ministers from both countries appear on national media to discuss the issue.  

Canadian Dollar (CAD) Rises as Bets on Early Rate Hike Continue 

The Canadian Dollar (CAD) has risen slightly overnight, as investors continue to make bets on an early rate hike. This follows the Bank of Canada’s (BoC) decision on Wednesday to keep the overnight interest rate at 0.25%. 

BoC Governor Tiff Macklem has indicated that an interest rate hike could expected as soon as April 2022 if inflation continues to rise. The BoC also announced that it would be ending its quantitative easing due to the country’s economic growth which prompted a spike in the Canadian Dollar.  

Falling variable mortgage rates have led to pandemic housing boom in Canada, and an early rate hike could lead to investors with multiple properties selling them off into a market with falling demand. This could lead to demand for the ‘Loonie’ dropping off as investment in the housing market falls. 

GBP/CAD Exchange Rate Forecast: Could Positive Canadian GDP Boost the Loonie? 

The release of GDP growth figures from the Bank of Canada is likely to be the main influence on the GBP/CAD exchange rate today. Forecasts are predicting growth to rise to 0.7% which may prompt a more bullish trading mood. 

The ongoing fluctuation of crude oil prices may also affect the Canadian Dollar today, as the index for WTI Crude has risen by 0.5% at time of writing. 

Looking to Monday the Markit PMIs for both the UK and Canada are due to be released. Both are forecast to rise, but could continuing global supply chain issues dampen investor expectations?   

Gareth Monk

Contact Gareth Monk


Related