Pound Canadian Dollar (GBP/CAD) Exchange Rate Strengthens amid UK Economic Growth

Pound Canadian Dollar Exchange Rate Jumps in Response to UK GDP Figures

The Pound Canadian Dollar (GBP/CAD) exchange rate is strengthening this morning after UK economic growth rebounded in July.

At the time of writing the GBP/CAD exchange rate is trading around CA$1.5176, which is up roughly 0.5% from this morning’s opening rate.

Pound (GBP) Investors Cheered by Economic Data

The Pound (GBP) is strengthening amongst its peers this morning as the GDP figures for July showed economic growth.

The growth is being attributed to the women’s Euros and the Commonwealth games, which saw an uptick in spending throughout July.

However, GBP gains are being capped as the growth is slower than expected. The forecast predicted a 0.4% expansion of growth, rather than the 0.2% uptick reported.

Despite the rebound in growth at the start of the third quarter economists are still concerned The UK is at risk of a recession

Suren Thiru, economist director for ICAEW fears growth will contract this quarter:

‘Despite July’s uptick, with warning lights of recession flashing red on most economic indicators and next week’s bank holiday likely to limit September output, the chances of the economy slipping into a downturn in the third quarter is growing.’

For now, though, investors seem happy with the GDP figures which are underpinning the Pound’s movement today.

Canadian Dollar (CAD) Mixed amid Falling Oil Prices

Trade in the Canadian Dollar (CAD) is mixed today amid softer oil prices.

At the time of writing WTI crude was at $86.73 per barrel. This follows two sessions of gains. The fall is being attributed to weak demand and the plans by the US to impose a price cap on Russian oil.

Analysts expect oil demand will continue to fall in the coming months amid signs of a global recession, with aggressive interest rate hikes from most of the world’s major central banks and ongoing Covid restrictions in China also likely to suppress demand.

As the Canadian Dollar relies heavily on the movement of the oil markets the currency is suffering today.

Politics could also be underpinning the ‘Lonnie’, but to a lesser extent as Pierre Poilievre becomes leader of Canada’s conservative party.

Poilievre’s focuses on cost-of-living concerns and the Government’s rate of spending, which investors will likely be interested in, as relevant policies could impact traders.

Pound Canadian Exchange Rate Forecast: Weak UK Wage Growth to Undermine Sterling?

The Pound Canadian Dollar exchange rate could reverse some of its gains on Tuesday with the publication of the UK’s latest jobs report.

With unemployment expected to remain unchanged in July, the focus will be on the accompanying earnings release. Will another underwhelming wage growth print drag on Sterling?

A speech by Bank of England (BoE) Governor Andrew Bailey could also influence The Pound tomorrow.

If Bailey remains cautious about the outlook for the UK economy GBP exchange rates could weaken.

In lieu of any significant data the Canadian Dollar will likely continue to trade on crude oil prices. Could a cap on Russian oil drop oil prices further?

 

Lauren Coulson

Contact Lauren Coulson


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