Pound Canadian Dollar (GBP/CAD) Exchange Rate Falls after Disappointing UK Retail Data
(Updated 16:48 26/01/23)
The Pound Canadian Dollar (GBP/CAD) exchange rate has slipped over the course of the day. The pairing may have seen losses after the releases of the latest distributive trades data from the Confederation of British Industry (CBI). The gauge of retail sector sales volumes fell to -23 in January after the +11 reading in December.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, had the following analysis of the sales slump:
‘The survey suggests that households have started the year in belt-tightening mode, as worries about job losses, higher mortgage rates and another jump in energy prices in April dominate their spending decisions.’
The GBP/CAD exchange rate may have also been pushed lower by a rebound in crude oil prices. The price of oil rose past $81 per barrel today amid optimism over China’s demand for the commodity.
At time of writing the GBP/CAD exchange rate is at around CA$1.6508, which is down roughly 0.6% from this morning’s opening figures.
Original article continues below:
Pound Canadian Dollar (GBP/CAD) Exchange Rate Trends Sideways after Dovish BoC Pivot
The Pound Canadian Dollar (GBP/CAD) exchange rate is trading within a narrow range today. Speculation of softer rate hikes from the Bank of England (BoE) be weighing on the exchange rate.
On the other hand, signals from the Bank of Canada (BoC) that they are set to pause further interest rates could be lending support to GBP/CAD.
At time of writing the GBP/CAD exchange rate is at around CA$1.6594, virtually unchanged from this morning’s opening figures.
Canadian Dollar (CAD) Comes Under Pressure from Prospect of BoC Rate Hike Pause
The Canadian Dollar (CAD) is edging lower against its peers today. Bets on a rate hike pause from the Bank of Canada may be weighing on CAD. The commodity-tied ‘Loonie’ may be finding support from an uptick in crude oil prices, however.
The BoC hiked interest rates by 26bps on Wednesday to 4.5%, its highest level in 15 years. The downward pressure on CAD may be coming from signals that the BoC will pause its policy tightening.
Speaking on Wednesday, BoC Governor Tiff Macklem signalled that inflation had peaked and that the central bank wanted to assess the impact of its rate hikes.
CAD may be seeing its losses limited by steady crude oil prices, however. Investors in the commodity are awaiting clarity over the EU’s ban on Russian oil.
Pound (GBP) Drops as Speculation BoE Could Soften Pace of Rate Hikes Grows
The Pound (GBP) is slipping today. A cautious market mood may be pulling Sterling lower today. Additionally, the gloomy outlook for the UK’s economy may also be denting confidence in GBP.
Comments from former Bank of England chief economist Andy Haldane may have added to the negative sentiment surrounding the Pound today. Haldane signalled that UK inflation may have peaked, leading to softer rate hikes from the BoE.
Speaking today, Haldane had the following analysis:
‘I’m hoping that with headline inflation now having peaked there is a decent chance that central banks will go a bit slower over the course of this year and won’t become too much of a brake on the recovery and the early signs on that was some flickers of life in the economy.’
Recent reports indicating that the Office for Budget Responsibility (OBR) will downgrade its 2023 growth forecasts could also be pulling GBP lower today.
GBP/CAD Exchange Rate Forecast: Will UK’s Poor Outlook Continue to Dent Pound?
Looking ahead for the Pound, January’s distributive trades figures from the Confederation of British Industry later today could pull Sterling lower. The measure of health for the UK’s retail sector is expected to decline after a buoyant January. The figures could add to the poor outlook for businesses following last week’s retail sales slump.
The Pound will see no other data releases this week. GBP could come under pressure from the prospect of further industrial action, as well as the gloomy forecasts for the UK’s economy. BoE rate hike bets could also drive movement in Sterling.
There are no significant data releases for the Canadian Dollar over the rest of the coming week. The ‘Loonie’ is likely to be affected by any shifts in the price of crude oil.
Market expectations of the BoC’s forward path could also drive movement in CAD this week. Investors are anticipating that the central bank could pause any further policy tightening. This predicted slowdown could weigh on the Canadian Dollar.