A disappointing UK Visible Trade Balance has weighed on Sterling (GBP) today as oil values are set to make their biggest weekly gain since 2009, keeping the ‘Loonie’ (CAD) on a bullish run.
Dovish Bank of England (BoE) Spurred GBP/CAD Exchange Rate Downtrend, ‘Loonie’ (CAD) Leaps on Oil Price Resurgence
Although the ‘Loonie’ (CAD) had been spurred higher thanks to a strong rally in oil prices, with Brent crude having risen above the $52 mark, this was brought to an end by the revelation that US stockpiles had increased by an unexpected 3,073,000 barrels. Reminding investors of the persistent presence of the global glut this saw a general retreat from the commodity-correlated currency, in spite of an improved Canadian Housing Starts figure for September.
However, while yesterday’s Bank of England (BoE) Rate Decision was unsurprising, traders having anticipated the 8-1 vote to leave interest rates unchanged at their record low of 0.5%, the relatively dovish tone of the accompanying minutes was not so expected. Policymakers expressed limited concern over the negative global headwinds, but nevertheless remained unconvinced by the weakness of domestic inflationary pressures. Suggesting that the BoE would be in no hurry to raise rates, this prompted pundits to dial back bets on an early 2016 rate hike and sent the GBP/CAD exchange rate into a fresh downtrend.
UK Trade Deficit Pushed Pound (GBP) Lower, Canadian Dollar (CAD) Remains Bullish Today
This morning saw demand for Sterling continue to decline, as the UK Visible Trade Balance printed disappointingly. The domestic trade deficit was revealed to have narrowed by a smaller margin than forecast, another sign that the global slowdown continues to impact the national economy in spite of policymakers’ comments. As UK Construction Output also underperformed substantially, the year-on-year figure contracting by -1.3%, there was little incentive to favour the Pound.
Oil, meanwhile, has bounced back yet again in defiance of recent pessimism with the commodity on track for its largest weekly gain in six years. Global benchmark Brent was up at $53.81 per barrel as US crude finally managed to top the $50 mark. This strong showing helped to push the GBP/CAD pairing to a fresh three-month low of 1.9801. Although the afternoon’s Canadian unemployment data proved mixed the ‘Loonie’ nevertheless failed to particularly weaken against its rival.
GBP/CAD Exchange Rate Forecast: Pound Hoping to Rally on Upcoming UK Consumer Price Index Data
Into next week the UK Consumer Price Index for September may provide a rallying point for the Pound, particularly given the importance which BoE policymakers have placed on domestic inflation with regards to monetary policy decisions.
Canadian data will be decidedly more limited after the weekend, with the only release of particular significance being the September Existing Home Sales figure. Should oil prices remain bullish, however, the ‘Loonie’ could easily continue to extend its recent gains.
Current GBP, CAD Exchange Rates
At time of writing, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was down in the region of 1.9881, while the Canadian Dollar to Pound Sterling (CAD/GBP) pairing was trending in the range of 0.5024.
Comments are closed.