Pound Canadian Dollar Exchange Rate Rises as UK Reports Falling Unemployment

(Updated 16:55 16/11/21)

The Pound Canandian Dollar (GBP/CAD) exchange rate is steady after confidence in the Pound (GBP) saw boost this morning. This was following the return of optimistic jobs data from the UK that showed a fall in unemployment figures.

As of time of writing, the GBP/CAD exchange rate is at around $1.6865, which is up 0.5% from this morning’s opening figures.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Boosted by Optimistic UK Job Data

The Pound Canadian Dollar exchange rate has continued to climb this morning, as positive job data from the UK has boosted the Pound.

As of time of writing the GBP/CAD exchange rate is at around $1.6873, which is up 0.45% from this morning’s opening figures.

Pound (GBP) Boosted by Positive UK Job Data

The Pound has steadily climbed this morning following the return of positive UK job data.

Figures released by the Office for National Statistics (ONS) show that unemployment fell to 4.3% in September which was below the forecast fall of 4.4%. Figures also showed 304,000 people moving from the unemployment register into active work.

Whilst the unemployment figures boosted optimism in Sterling, this may be tempered by record numbers of job vacancies in the UK. Open vacancies rose to a new record of 1,172,00 from August to October as sectors such as care, warehouse work, and logistics still struggle to with severe staff shortages.

Suren Thiru, head of economics at the British Chambers of Commerce, commented:

‘Record job vacancies suggest that the chronic staff shortages encountered by businesses are intensifying and this could derail the recovery by forcing firms into a more long-lasting decline in their operating capacity’.

The Bank of England (BoE) is likely to be keenly watching these figures this morning, as falling unemployment may well put additional pressure on the central bank to raise interest rates ahead of schedule.

Members of the BoE’s Monetary Policy Committee (MPC) including Governor Andrew Bailey have repeatedly stated that no interest rate decisions would be made before the release of post-furlough employment data.

Infront of the UK’s Commons Treasury select committee yesterday Bailey stated that all future meetings of the MPC were ‘in play’, a possible sign to market speculators that an early interest rate rise is being considered. Reaction to the jobs data and any reaction by the BoE is likely to drive further movement in the Pound over the course of the day.

Canadian Dollar (CAD) Dips as Demand for Oil Uncertain

The Canadian Dollar ticked downward against its competitors overnight, as the currency continues to be affected by the fluctuating price of oil.

The climbing price of oil has analysts concerned today, as depleted inventories following a period of high demand have left the markets with little margin for error. Tony Nunan, senior risk manager at Mitsubishi Corp, expressed their concern regarding the situation:

‘At these oil prices, supply is going to grow but it might take six months and inventories have come down so low. We don’t have a safety margin.

We have very low inventory levels and if we have a very cold winter and OPEC is still sluggish at increasing supplies that could push oil prices up.’

Adding to the instability of crude is the concern that demand could drop over the coming months following a spike in COVID-19 cases in Europe. With supplies expected to rise, this could lead to a drop in the price of crude in the coming months which is likely to affect the commodity-tied ‘Loonie’.

Rumours still persist that US President Joe Biden will dip into the country’s Strategic Petroleum Reserve in an effort to bring down prices at the pumps, further adding to demand concerns within the marketplace.

GBP/CAD Exchange Rate Forecast: Will Rising Inflation force Central Banks’ Hand?

Looking ahead, tomorrow will see the release of inflation data for both the UK and Canada. The UK’s rate is forecast to rise to 3.9% from 3.1% in October, with Canada also expected to show a rise to 4.9% from 4.4%. over the same period

Both country’s central banks have been clear that inflationary pressures could prompt an early interest rate rise, although the Bank of Canada (BoC) has been much more hawkish in its tone than the Bank of England.

It’s likely that tomorrow’s figures will prompt further speculative bets on both currencies by traders predicting an early interest rate rise by either central bank. This in turn could prompt fresh movement in both Sterling and the Canadian Dollar.

Gareth Monk

Contact Gareth Monk