- UK inflation rate highest in 15 months
- IMF predicts ‘severe damage’ to UK if ‘Brexit’ happens
- ‘Loonie’ unbalanced by fickle commodity prices and impending BOC activity
- Canadian central bank stats to generate most movement in near future
The Pound (GBP) has generally been performing exceptionally well against its peers today, although even recent positivity has come with its fair share of potential downfalls further down the line.
The Canadian Dollar (CAD) has been making fairly positive movement, although imminent news from the Bank of Canada (BOC) may diminish this current trend.
UK Economic News: Inflation Rate Stats send Pound Soaring, while IMF Issues Warning
The Pound Sterling (GBP) has been a safe bet for investors today, having made notable gains against almost all of its peers in the aftermath of the morning’s UK domestic data.
Among these gains have been 0.3% against the Swiss Franc (GBP/CHF), 0.4% against the Euro (GBP/EUR), 0.6% against the Japanese Yen (GBP/JPY) and 0.9% against the Polish Zloty (GBP/PLN). Losses have consisted of -0.2% against the Canadian Dollar (GBP/CAD), -0.5% against the New Zealand Dollar (GBP/NZD) and -0.6% against the Australian Dollar (GBP/AUD).
The biggest pieces of UK data today have been the nation’s inflation rate stats for March, which have exceeded forecasts on the month and the year for the base and monthly fields. Adding to the positivity of this news, the rise in inflation represents the highest level in over a year.
Although most economists have remained leery of predicting a Bank of England (BoE) interest rate hike on the back of this news, Kallum Pickering of Berenberg bank is more hawkish, stating in the wake of the news that:
‘As long as the UK votes to stay in the EU, we expect the Bank of England to hike rates by 25 bps in November. We see a 35% chance of a ‘Brexit.’’
The issue of the UK Referendum has not gone unmentioned elsewhere today, as in its latest report the International Monetary Fund (IMF) has specifically identified a ‘Brexit’ as one of the greatest threats to the stability of the UK economy that the nation currently faces.
Canadian Dollar (CAD) Advances on Peers Today as US Economic Prospects Worsen
The ‘Loonie’ (CAD) has made a number of gains against its peers today, with these chiefly consisting of 0.3% against the Pound Sterling (CAD/GBP) and 0.6% against the Euro (CAD/EUR).
Although no major Canadian data has been announced this week, the Canadian currency has nonetheless managed to appreciate against the competition due to external developments.
Among these have been the currently supportive price of crude oil and gold, as well as a series of recent speeches from the Federal Reserve that have been decidedly dovish in nature.
Most supportively from the Fed has been a recent speech from Bank of New York President William Dudley, who has stated that the ‘American Dream’ of widespread social mobility is actually more likely to be realised in Canada, among other places, than actuality is in the United States themselves.
Elsewhere, Fed Bank of Dallas President Robert Kaplan has spoken against an April interest rate hike taking place, something that has served to give investors in the ‘Loonie’ another potential month of breathing room.
Future GBP, CAD Forecast: Central Bank Stats to Generate Most Movement in Near-Future
Both the UK and Canada are set to release central bank data tomorrow, although at the time of writing the latter nation’s contribution was expected to be the more impactful.
This will consist of the BOC interest rate decision for April, as well as a later speech from BOC Governor Stephen Poloz.
The UK’s BoE releases will be the credit conditions survey and 2016 budget hearing, both of which have the potential to further raise the Pound’s appeal if they are particularly positive.
Current GBP, CAD Exchange Rates
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 1.8297 and the Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate was trending in the region of 0.5470 today.
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