Pound Canadian Dollar (GBP/CAD) exchange rate narrows ahead of Canadian jobs data
The Pound Canadian Dollar (GBP/CAD) exchange rate is rangebound this morning, as investors await the latest Canadian jobs data.
At the time of writing, GBP/CAD) is trading at around CA$1.6965, showing little movement from today’s opening rates.
Canadian Dollar (CAD) listless ahead of labour data
The Canadian Dollar (CAD) is directionless this morning, as markets await the afternoon’s unemployment data.
In January, economists anticipate the unemployment rate to have increased to 5.9% from 5.8%. This could weigh on the ‘Loonie’ by suggesting growing weakness in the Canadian employment market.
However, crude oil prices are on the rise this morning, which is likely underpinning the Canadian Dollar. As the ‘Loonie’ is closely tied to crude prices, the rise brought about by news that Israel has rejected a ceasefire is acting as a cushion from steeper losses.
Additionally, easing concerns around an over-supply of oil is serving to aid prices. The Energy Information Administration reduced it’s forecasts for US output, stating:
‘We forecast production will return to almost 13.3 million barrels per day in February but then decrease slightly through the middle of 2024 and will not exceed the December 2023 record until February 2025.’
Pound (GBP) wavers amid lack of data
The Pound (GBP) is struggling this morning, due to a lack of impactful macroeconomic data. This is keeping the Pound exposed to shifts in risk appetite, as well as serving to temper its movements.
With the market mood in flux amid increasing geopolitical tensions, the increasingly risk sensitive Pound is enduring further pressure.
However, Bank of England (BoE) interest rate hold bets may be underpinning Sterling. Yesterday, notably hawkish BoE policymaker Catherine Mann delivered a speech which advocated for tight monetary policy.
Citing continued tightness in the labour market and strong service sector activity, Mann stated:
‘This constellation points to somewhat stronger, even if not strong, demand going forward. Against a backdrop of sluggish supply growth and possible upside shocks, I see risks of continued inflation momentum and embedded persistence. Inflation is the most pernicious of taxes, affecting all households, and those at lower incomes most severely.’
Ultimately though, the absence of macroeconomic data is preventing Sterling from gaining momentum this morning.
Pound Canadian Dollar exchange rate forecast: UK wage data in focus
Looking ahead to early next week for the Pound, the latest UK labour data is due on Tuesday. Economists forecast an increase in both unemployment and average earnings, which may induce volatility in the Pound.
Average earnings excluding bonusses are forecast to have increased from 6.6% to 6.9% in December, could underpin Sterling. As this would show wages remain above inflation, it may yield additional room for the Bank of England (BoE) to maintain hawkish action.
For the Canadian Dollar, data releases are scarce as we begin next week’s session. Because of this, the ‘Loonie’ may struggle to attract support from investors.
However, due to its commodities-sensitive nature, a rise in oil prices could lift CAD against its peers.