GBP/CAD Pairing Touched New One-Month Low on Declining Pound (GBP) Sentiment
After a severe drop-off yesterday afternoon, which saw the GBP/CAD exchange rate fall to a fresh monthly low of 2.0061, the continuing uncertainty of the commodity markets and caution ahead of Canadian unemployment figures have boosted the pairing to trend sluggishly at 2.0125 at time of writing.
Earlier…
A shortfall on the UK Services PMI held the Pound (GBP) on a bearish trend as relative stabilisation of oil prices shored up the ‘Loonie’ (CAD) today.
UK PMIs Declined to Decrease Chances of Near-Term BoE Rate Tightening, GBP/CAD Conversion Rate Faltered
Sterling (GBP) did not have a strong start to the week as both the UK’s Manufacturing and Construction PMIs fell short of forecasts. This disappointed traders, leading to suggestions that the recovery of the domestic economy was not quite so assured as Bank of England (BoE) Governor Mark Carney would have the world believe. Although the construction sector still showed growth on the previous month’s figure, 57.3 over 57.1, the combined effect of the figures kept the GBP/CAD exchange rate trending down on the week’s opening at 2.0182.
The ‘Loonie’ (CAD) was in a position to capitalise on the softening of its rival thanks to a bullish three-day run of increases on the price of oil, with risk aversion also easing after the turmoil of the last week. Nevertheless, Tuesday saw the second-quarter Canadian GDP contract to officially confirm the nation’s current state of recession, even if the figure proved to be slightly better than had been predicted.
Oil Fluctuates in spite of Lack of China Activity, ‘Loonie’ (CAD) Makes Gains on Softening Pound (GBP)
Rounding out a bad slate of UK PMIs, the Services figure declined substantially in the last month to fall from 57.4 to 55.6, all but confirming that BoE interest rate tightening will not be on the table until the first quarter of next year. This dovish state of affairs strongly reduced the appeal of the Pound, driving the GBP/CAD exchange rate to rapidly downtrend throughout the rest of the day.
In spite of a Chinese holiday closing the local stock market for the remainder of the week, commodities have continued to experience volatility. Naturally those earlier significant increases on oil prices came to an abrupt end overnight as both Brent and US crude began to drip back towards the lows of recent weeks due to a higher level of surplus in the global inventory. However, values soon began to stabilise as investor optimism over looser central bank policies was encouraged by the European Central Bank (ECB) and the prospect of a potential September Fed take-off.
GBP/CAD Exchange Rate Forecast: Movement Likely on Canadian Unemployment Figures
While the Pound will not be receiving any fresh domestic stimulus ahead of the weekend, movement could be prompted for the GBP/CAD pairing by the upcoming Canadian Unemployment figures. Expected to be less-than-positive for the ‘Loonie’ with a decrease forecast on the Net Change in Employment level, this data could trigger a more substantial rally for the currency pair. Should the value of oil resume its recent downturn the Canadian Dollar will most likely return to bearish territory.
Current GBP, CAD Exchange Rates
At time of writing the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending negatively at 2.0121, while the Canadian Dollar (CAD/GBP) pairing is rising in the range of 0.4965.
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