The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate recorded modest gains on Tuesday ahead of UK Industrial and Manufacturing Production figures.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate recorded -0.74% market movement in the second half of Monday’s European trading, after Canadian Housing Starts jumped above economists’ forecasts.
Housing Starts reached 187.3K in January after December’s 179.6K.
Economist Laura Cooper stated: ‘The expected slowing in housing starts in energy dependent regions in January failed to materialise, indicating that at this stage, the commodity price plunge is not yet negatively feeding through to confidence channels and into home-building activity.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell during Monday’s European session as investors forecast that the Bank of England’s (BoE) upcoming inflation report will be dovish in tone.
Bank of England Governor Mark Carney will hold a press conference after the release to discuss the central bank’s inflation projections. Many economists are finding it difficult to predict how low the BoE’s inflationary forecast will be as oil prices keep pressuring consumer prices lower.
Pound Sterling (GBP) Exchange Rate Forecast to Fall on Inflation Report
Governor Carney has previously stated that inflation could dip into negative territory this year—and since his initial statement, price pressures have increased.
HSBC chief economist Simon Wells suggested that this week’s BoE inflation report ‘may be the first to show a central projection for inflation that is, in some quarters negative. It could be the Bank of England’s first deflation report.’
With investor sentiment in the Pound Sterling exchange rate likely to wane this week ahead of the Bank of England announcement, it could offer currencies like the Canadian Dollar the opportunity to advance.
The near 60% tumble in oil prices has pressured the Canadian Dollar exchange rate significantly lower in recent months. The Canadian Dollar’s gains against the Pound were therefore limited as black gold continued its decline in Monday’s session after Chinese data signalled a slowdown in one of the world’s largest economies.
Chinese imports plummeted by a whopping -19.9% in January on the year from December’s -2.4%. Economists had forecast a much smaller fall to -3.2%.
ANZ bank commented on the situation stating: ‘Opportunistic buying waned in January as a combination of weak demand, high inventories and tight credit conditions impacted import demand. When China stops filling up its SPR (strategic petroleum reserves), it would definitely put a bearish note to prices.’
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate could continue to fluctuate on any other comments made by Governor Mark Carney in Monday’s session as the G20 meeting commences.
In addition, Canadian Housing Starts figures are also due out later today and will give an indication of the health of the Canadian property market.
Tuesday could offer a little more movement for the GBP/CAD currency pair with publications such as the UK NIESR Gross Domestic Product (GDP) Estimate, Industrial Production and Manufacturing Production stats.
With highly influential Canadian domestic data thin on the ground this week, Thursday’s Canadian New Housing Price Index could cause significant movement for the ‘Loonie’.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is hovering at 1.9036. The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is trending in the region of 0.5259.
