Pound Canadian Dollar Exchange Rate Weakens as UK Economic Cloud Darkens
The Pound Canadian Dollar (GBP/CAD) exchange rate is slipping amid growing concerns of the UK economy.
At time of writing the GBP/CAD exchange rate is trading around $1.7018, a 0.21% slip from this morning’s opening levels.
Pound (GBP) Undermined by Mounting Economic Pessimism
The Pound (GBP) is struggling for demand against its rivals today. A flurry of economic headwinds is preventing Sterling from making any ground up.
Without any major economic data, GBP investors have been fully focused on gloomy economic outlook for the UK. The only saving grace for the Pound this week were elevated interest rate hike bets from the Bank of England (BoE). However, the latest speeches from central bank policymakers did exactly opposite that; temper them.
A dovish BoE Governor Andrew Bailey confirmed that inflation has shown signs of a marked fall. But he also commented that monetary policy is ‘near the top of the cycle’. With the central bank following the likes of other major banks, a hold in rate could be sooner than later. BoE policymaker Swati Dhingra also chimed in:
‘Policy is already sufficiently restrictive, and the lagged effects of further tightening pose serious risks of output volatility in order to make a small dent on inflation.
‘While each additional increase in Bank Rate intensifies the effect on currently exposed subsets of the economy. For example those rolling off fixed-rate mortgages – it takes time for the breadth of the effects to increase.’
Canadian Dollar (CAD) Quiet amid Turbulent Oil Prices
Meanwhile, the Canadian Dollar (CAD) is struggling to find a clear direction today as a lack of data left the commodity-linked ‘Loonie’ exposed to wavering oil prices.
WTI crude retreated from its 10-month high yesterday and was last seen just shy of the $70 a barrel mark, a 0.63% fall on the day. A souring global market mood hinted at further slowdowns in growth, weighing on risk appetite, and demand for black oil is wavering.
However, the resurgent US Dollar (USD) could be keeping the Canadian Dollar afloat due to the latter’s close trading relationship with CAD. A resilient US economy is buoying the ‘Greenback’, and keeping the Canadian Dollar moderately supported.
Pound Canadian Dollar Forecast: Slipping Canadian PMIs to Dent the Loonie?
Looking ahead, the Pound Canadian Dollar exchange rate could see further movement with the latest Ivey PMIs. Despite an expected modest improvement, the reading could still point to contraction in Canadian economic activity. A second consecutive month of slowdown could weigh on the ‘Loonie’ and drag it lower.
Meanwhile, no further data could keep pressure on the Pound as investors mull over the precarious nature of the UK economy. With recession fears rising, and interest rate bets paring, Sterling could be in for a bumpy ride to see out the week.