Pound Canadian Dollar Exchange Rate Directionless as UK Food Costs Surge
The Pound Canadian Dollar (GBP/CAD) exchange rate is rangebound this morning as GBP investors focus on bleak domestic headlines.
At the time of writing the GBP/CAD exchange rate is trading around CA$1.6238, which is virtually unchanged from this morning’s opening rate.
Pound (GBP) Subdued on Gloomy UK Headlines
The Pound (GBP) is muted this morning as a lack of significant data leaves GBP investors to focus on worrying domestic headlines.
The cost-of-living crisis continues weigh on Sterling sentiment as consumers brace for a tough Christmas. According to a report by the British Retail Consortium (BRC) food inflation has surged to a record high, jumping to 12.4% over the last year.
Coupled with higher energy prices and lagging wage growth this is supressing consumer spending during the key holiday trading period.
Victoria Scholar, head of investment at interactive investor, comments:
‘Increasing essential food prices are adding to the cost-of-living crisis, unfairly impacting those at the lower at of the income spectrum more acutely…Families will be forced to make tough spending choices this festive season, with many opting for a slimmed down version of Christmas this year.’
Canadian Dollar (CAD) Rangebound despite Oil Price Uptick
The Canadian Dollar (CAD) is struggling to find momentum today, despite oil prices rising for the third consecutive session.
At the time of writing WTI crude is trading around $79 per barrel up roughly 2% on the day. This increase is being caused by supply concerns.
On Tuesday data from the American Petroleum Institute (API) revealed a fall in US crude inventories. Markets were expecting stocks to shrink by2.487 million barrels but were hit with a drop of almost 8 million.
This combined with the upcoming Organization of the Petroleum Exporting Countries (OPEC) meeting saw oil prices begin to recover from last week’s dip. The group is widely expected to cut production further to counter market weakness.
However, it’s possible that weaker-than-expected data from China is weighing on the ‘Loonie’ this morning. November’s Manufacturing PMI printed a drop from 49.2 to 48. The fall in manufacturing will likely weaken China’s demand for oil, which could be concerning investors.
Pound Canadian Dollar Exchange Rate Forecast: Economic Sentiment to Weigh on GBP?
Looking ahead, a lack of significant UK data for the rest of the week could see investors focus on domestic headlines.
As inflationary pressures continue to mount ahead of Christmas it’s possible that more businesses will report that they are struggling. Stoking uncertainty over the size of the recession facing the UK and potentially weighing on the Pound.
Turning to the Canadian Dollar, a lack of significant data will likely see investors turn their focus to the upcoming OPEC meeting. If the organisation decides to reduce their oil output again the oil-linked ‘Loonie’ could get a boost.