Pound Canadian Dollar Exchange Rate Falls as UK Inflation Accelerates
The Pound Canadian Dollar (GBP/CAD) exchange rate is struggling to find support this morning. Following a hotter-than-expected UK inflation print.
At the time of writing the GBP/CAD exchange rate is trading around CA$1.5503, which is down roughly 0.4% from today’s opening rate.
Pound (GBP) Losses Ground as Inflation Figures Tick Higher
The Pound (GBP) is on the back foot this morning as UK inflation figures printed hotter-than-expected.
Headline inflation caused particular concern as it hit a 40-year high. Inflation was expected to rise from 9.9% to 10% but instead climbed to 10.1%. Core inflation, which strips out volatile commodities like food and petrol prices climbed to 6.5% versus the 6.4% forecast.
The rise in inflation has economists concerned about the worsening cost-of-living-crisis within the UK. Jack Leslie, Senior Economist at the Resolution Foundation has said households need support:
‘Surging food prices have driven a return to double-digit inflation across Britain and high inflation looks set to stay with us for some time too, with accelerating services producer price inflation and the early end of the Energy Price Guarantee likely to put upward pressure on consumer prices next year.’
However, Sterling’s losses have been capped as the above forecast inflation figures are also bolstering expectations for the Bank of England’s (BoE) next interest rate decision.
Canadian Dollar (CAD) Gains Capped by Soft Oil Prices
The Canadian Dollar’s (CAD) gains against the Pound have been tempered this morning as a drop in oil prices weighs on the commodity-linked ‘Loonie’.
At the time of writing, WTI crude oil is trading around $82 per barrel, down from a high of $90 earlier this month. The drop in oil is being driven by concerns over Chinese demand.
China is the world’s top importer of crude oil. When the country postponed the release of its Q3 GDP report yesterday, it signalled to markets economic growth within the world’s second largest economy may be weaker than expected.
Also weighing oil markets is the European Union’s latest sanctions on Russian crude oil. The EU plans to enforce shipping restrictions, which would see importers adhere to selling Russian crude at an agreed price threshold.
Pound Canadian Exchange Rate Forecast: GBP to be Driven by Political Uncertainty?
Later today, the Pound Canadian Dollar exchange rate could be driven by further political unrest.
With no more UK data to release today, investors could turn to political headlines to guide trade. Liz Truss will be taking part in prime minister questions later today, which has the potential to inject further volatility in the Pound.
Meanwhile, the release of Canada’s own CPI release could drag on CAD exchange rates later this afternoon.
An expected slowing of inflation in September may dampen expectations for future Bank of Canada (BoC) interest rate hikes.