Pound Canadian Dollar (GBP/CAD) Exchange Rate Remains Weaker Post-US Inflation
The Pound Canadian Dollar (GBP/CAD) exchange rate sank during Thursday’s trading session in response to the publication of the latest US inflation data. As the US Dollar (USD) climbed, the Canadian Dollar (CAD) also traded up, pressuring GBP/CAD.
Into today, additional US data may direct CAD movement, given a lack of domestic data from Canada. Meanwhile, the Pound (GBP) is likely to trade on risk dynamics and may be affected by a speech given by Bank of England (BoE) Governor Andrew Bailey to the Institute of International Finance.
At the time of writing, GBP/CAD is trading at C$1.6692, having fallen by almost 0.2% in the past 24 hours.
Pound (GBP) Resists Further Losses
The Pound appears to be stabilising against its peers this morning, trading flat in several exchange rates but avoiding extra losses overnight.
Sterling generally trades lower in a risk-sensitive environment, given its risk-on status; following yesterday’s higher-than-expected US inflation data, the currency tumbled against its safe-haven peers. Against perceived-riskier assets such as the Antipodean currencies, however, GBP climbed.
Markets are focused on fresh trading impetus this morning: BoE Governor Andrew Bailey is due to speak at the annual conference for the Institute of International Finance and will potentially relay hints regarding the central bank’s monetary policy outlook.
Furthermore, geopolitical developments could inspire shifts in risk sentiment. The ongoing conflict between Israel and Gaza has been heavily publicised with criticism levelled both ways – further involvement from the international community could inspire hopes of a ceasefire.
This morning’s FX report from ING bank focuses upon the conflict accordingly, with analysts observing:
‘We suspect political and geopolitical events will start taking centre stage in the FX market into the weekend… the escalation in Middle East tensions can keep the upside capped for pro-cyclical pairs.’
Canadian Dollar (CAD) Retains Upside as Oil Remains Stable
The Canadian Dollar benefited during yesterday’s trade from strength in the US Dollar, given the positive correlation between the currencies. This morning, CAD retains the upper hand against the Pound and several other peers despite a lack of significant Canadian data.
Fuelling the CAD upside is likely to be the continuation of strong oil prices. Tensions in the Middle East have yet to inspire serious supply concerns, yet sanctions on Russian supplies keep traders fearful. As of this morning, WTI crude futures have risen above $83 per barrel.
Further buoying the price of crude are OPEC’s demand forecasts. The Organisation for Petroleum Exporting Countries stuck to its predictions for global oil demand growth, citing signs of a resilient world economy and projected demand recovery in China.
A dearth of Canadian data today leaves the ‘Loonie’ to continue trading on external factors, although tailwinds may still linger following the release of building permits data on Wednesday. The report ticked up unexpectedly to 3.4%, against the anticipated 0.5% and a previous decline of 3.8%.
Driving the increase were more construction intentions for commercial and residential buildings; Quebec and Ontario planned more warehouses and office buildings as employment in the country picks up.
GBP/CAD Exchange Rate Forecast: US Data to Trigger Movement?
The Pound Canadian Dollar exchange rate could trade this afternoon on key US data, given a lack of releases from both the UK and Canada.
US consumer sentiment will be in focus, potentially denting the US Dollar if it prints below last month’s reading at 67.2, as expected. A downside in USD exchange rates might trigger headwinds for the Canadian Dollar, buoying GBP/CAD.
Elsewhere, risk dynamics could cap Pound gains if bearish sentiment reigns. A risk-off mood is likely to support the ‘Loonie’ over GBP, given the Canadian Dollar’s positive correlation with the safe-haven USD.