Pound Canadian Dollar Exchange Rate Stalls as UK GDP Data Signals Likely Recession
The Pound Canadian Dollar (GBP/CAD) exchange rate is trading in a narrow range this morning after the UK’s latest GDP figures reported a contraction in domestic growth in the third quarter.
At the time of writing the GBP/CAD exchange rate is trading around CA$1.5603, which is practically unchanged from this morning’s opening rate.
Pound (GBP) Under Pressure as UK Business Growth Contracts
The Pound (GBP) is struggling for support this morning, as the latest GDP figures report a contraction in the UK economy.
According to data published by the Office for National Statistics (ONS) the UK economy contracted by 0.2% in the third quarter. This was down from a 0.2% expansion in Q2 but beat forecasts for a 0.5% slump, which may have prevented the GBP/CAD exchange rate from falling this morning.
News that the UK economy is ‘halfway to recession’ is limiting the Pound’s upside potential however.
Guy Foster, chief strategist at wealth manager RBC Brewin Dolphin, commented: ‘Economic growth was less bad than feared but the pressure from rising interest rates will intensify going forward, house prices have started falling and the labour market is beginning to ease. The UK economy is showing the signs of a classic slide into recession.’
Comments from UK Chancellor Jeremy Hunt may also be limiting Sterling’s losses this morning as he claimed his upcoming Autumn Statement will help to protect vulnerable business and families from the impending recession.
Canadian Dollar (CAD) Drops Despite Uptick in Oil Prices
The Canadian Dollar (CAD) is down against the majority of its peers this morning, despite a rise in oil prices.
At the time of writing, WTI crude is trading at about $89 per barrel. Prices jumped by more than 3% on positive news from China.
China is the world’s largest importer of crude oil, so the news that they have reduced some of their covid restrictions eased some concerns about their reducing demand.
The downturn in the Canadian Dollar appears linked to its increasingly positive correlation with the US Dollar. Which remains on the defensive following yesterday’s US inflation release.
Pound Canadian Dollar Exchange Rate Forecast: Key Data to Drive GBP?
Looking ahead to the first half of next week, the Pound Canadian Dollar exchange rate could be driven by the UK’s unemployment data expected on Tuesday.
According to forecasts, the country’s jobless rate is expected to rise from 3.5% to 3.6%. If this prints true, the rise in unemployment could stoke further recession concerns as people struggle to find jobs in a shrinking economy. If, however, the data prints better than expected this could ease investors’ concerns somewhat and help buoy the Pound.
Turning to the Canadian Dollar, a lack of significant data at the beginning of the week could see the see the ‘Loonie’ move in line with the oil markets.
Any further news from China in regard to their Covid policy could see significant movement in oil prices, as investors still worry about China’s reduced demand.