Pound to Canadian Dollar Exchange Rate Losses Limited as Canadian Dollar Weakens
While the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has been knocked back from highs this week, its losses have still been limited. Investors have been hesitant to buy the Canadian Dollar (CAD) too much ahead of this afternoon’s key Canadian job stats.
Since opening this week at the level of 1.7489, GBP/CAD has trended largely with a downside bias. While GBP/CAD did briefly touch on a monthly high of 1.7549 earlier in the week, this was short-lived.
At the time of writing on Friday, GBP/CAD trends closer to the level of 1.7409. The pair has recovered from the week’s lowest levels as the Canadian Dollar’s rally attempts run out of steam.
Markets are awaiting this afternoon’s upcoming Canadian job market report. The Bank of Canada’s (BoC) September policy decision, set for next week, will be the next big focus for investors.
Pound (GBP) Exchange Rate Appeal Knocked by Bank of England (BoE) Comments
The Pound’s (GBP) movement has been more mixed this week. Investors briefly sold the Pound against a rebounding US Dollar (USD). The rising USD also boosted CAD demand.
However, even though demand for USD and CAD has weakened today, GBP has been unable to regain much of these losses.
This is because the Pound’s appeal is also being weighed by concerns over Britain’s economy, and Brexit.
Bank of England (BoE) policymakers have indicated in speeches this week that Britain’s outlook is poorer than it was when the bank held its August policy decision.
According to BoE policymaker Michael Saunders, he predicts the bank will ramp up monetary policy stimulus too. This is weighing on Sterling today.
‘It is possible that, both in the UK and globally, we will be living with Covid for much if not all of the three year forecast period. […] It is possible that there will not be effective vaccines in the next year or two, or that vaccines will only provide short-lived immunity.’
Canadian Dollar (CAD) Exchange Rates Weighed by Oil Prices Ahead of Job Report
For much of this week, the Canadian Dollar has been correlated to movement in the US Dollar (USD). As the US Dollar rebounded from its worst levels in profit-taking, the Canadian Dollar also advanced.
The Canadian Dollar’s rebound was further supported by recently strong Canadian ecostats.
Yesterday’s Canadian trade balance report was a little better than forecast, further boosting Canadian Dollar support. According to Peter Hall, Chief Economist at Export Development Canada:
‘That’s beyond expectations and it’s tremendously good news for the exporting community and for the economy as a whole,
We are back from the chasm’
While the Canadian Dollar has not rebounded as strongly as the US Dollar (USD), it has overall seen good performance this week.
Still, the Canadian Dollar’s appeal was limited on Friday. Investors are awaiting the afternoon’s key Canadian job market report. Weaker prices of oil, Canada’s biggest export, are also weighing on the currency.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Canadian Job Report
The Pound to Canadian Dollar exchange rate could still see a shift in movement before markets close for the week, depending on this afternoon’s anticipated data.
Canada’s August job market report will be published, and is likely to be the week’s most influential news for Canadian Dollar investors.
If these stats surprise investors, they could influence market perception of how Canada is weathering the coronavirus pandemic.
Stronger than expected Canadian job stats could leave GBP/CAD even weaker before markets close for the week.
On the other hand, weak job figures or continued weakness in oil prices may weaken the ‘Loonie’. This may make it easier for GBP/CAD to see some recovery before markets close for the week.
Of course, the Bank of Canada’s (BoC) comments on the health of Canada’s economy and how it may impact monetary policy are likely to be a big focus for the Canadian Dollar outlook next week.
As for Sterling, potential Brexit developments and next week’s UK growth rate stats could influence the Pound to Canadian Dollar (GBP/CAD) exchange rate as well.