Pound Canadian Dollar (GBP/CAD) Exchange Rate Slips as US Dollar Rises
Article updated 16:36 12/10/23:
The Pound Canadian Dollar (GBP/CAD) exchange rate has fallen further this afternoon, as the ‘Loonie’ benefits from its close ties to the US Dollar (USD).
On the back of hotter-than-expected US inflation data, CAD has surged alongside the ‘Greenback’.
Additionally, oil prices have continued to climb over the course of today’s trade, contributing additional tailwinds.
At the time of writing, GBP/CAD is trading at around CA$1.6682, a fall of just under 0.4% from the morning’s opening rates.
Original article continues below:
Pound Canadian Dollar (GBP/CAD) Exchange Rate Stumbles amid Underwhelming UK GDP Data
The Pound Canadian Dollar (GBP/CAD) exchange rate is edging lower this morning, as the UK’s August GDP data disappoints investors.
At the time of writing, GBP/CAD is trading at around CA$1.6716, a fall of just under 0.2% from the morning’s opening levels.
Pound (GBP) Undermined by Downbeat GDP Analysis
The Pound (GBP) is enduring middling trade this morning, as August’s GDP data printed in line with expectations.
While it showed that the UK economy had recovered from July’s steep 0.6% contraction, it remained underwhelming. The 0.2% expansion appears to do little for perceptions that the UK is heading towards economic recession.
Furthermore, July’s figure was revised downward. Estimates initially pegged growth at 0.5%, with this morning showing that the UK’s economy had contracted more than expected.
Melanie Baker, Senior Economist at Royal London Asset Management, commented:
‘For now, the picture of the economy coming from the data is lacklustre. Given how much monetary policy tightening we’ve had it is still somewhat surprising that the UK economy has managed to avoid recession so far. I am not convinced it will continue to do so.’
Owing to this, investors have additional begun to pare back Bank of England (BoE) interest rate hike bets. With the UK’s economy appearing to be on a knife-edge, further tightening seems off the cards.
Recent releases have further indicated that inflationary pressures are beginning to fade in the UK, suggesting monetary policy is restrictive enough.
Canadian Dollar (CAD) Narrows Despite Recovering Oil Prices
The Canadian Dollar (CAD) is trading within narrow boundaries this morning, despite a sharp uptick in oil prices.
At the time of writing, crude oil prices are trading at around $84.239, up just under 0.9% from the morning’s opening rates.
However, the crude-linked ‘Loonie’ seems unable to capitalise on this advantage. Markets are quiet thus far this morning, with the focus shifting towards impactful US inflation data later in the session.
Additionally, data releases are generally in short supply for the Canadian Dollar. Because of this, the ‘Loonie’ lacks the catalyst needed to strengthen amid robust oil trade.
Pound Canadian Dollar Exchange Rate Forecast: Lack of Data to Cap GBP?
Looking ahead for the Pound, data releases are set to once again taper off through to the end of the week’s session.
Because of this, Sterling may be left exposed to shifts in risk appetite across markets. With the market mood currently volatile amid continuing conflict between Israel and Hamas, bearish trade could weaken GBP.
Furthermore, continued analysis of the UK’s economic outlook could weaken Sterling, if perceptions remain pessimistic.
The story is similar for the Canadian Dollar. However, as a crude-sensitive currency, the recent volatility affecting oil prices could prove a boon for the ‘Loonie’.
If prices continue to rise amid concerns over the conflict’s impact on oil producing Middle Eastern countries, CAD could follow suit.