Pound to Canadian Dollar Exchange Rate Losses Limited on Mixed Trade
Despite optimistic US-China trade news boosting demand for the trade-correlated Canadian Dollar (CAD) today, Pound to Canadian Dollar (GBP/CAD) exchange rate losses were limited, with investors cautious of CAD amid fresh oil price uncertainties.
Due to a lack of demand for the Canadian Dollar, the Pound (GBP) was able to sustain more of last week’s impressive gains, with GBP/CAD advancing over 2 cents from 1.6752 to 1.6992.
Since markets opened yesterday, GBP/CAD has been trending lower on positive global trade hopes. The pairing has only lost about half a cent so far, approaching 1.6945.
Investors remain hesitant of the Pound as UK election polls and political campaign strategies remain uncertain. However, no-deal Brexit fears have lightened, with analyst predictions suggesting the Pound is unlikely to fall much over the coming month.
Pound (GBP) Exchange Rates Lack Drive Even as PMIs Beat Forecasts
Investors have seen little reason to move on Sterling so far this week, as the UK economy and political outlooks show no conspicuous change since the December general election was confirmed last week.
A general election is widely perceived as a positive move for Brexit as a no-deal result is now less likely, giving the Pound good reason to hold onto its recent gains. However, a lack of clarity and uncertain predictions for how the election will unfold also limits potential gains.
The cloud of political uncertainty overshadowing Sterling also saw the British currency fail to benefit from October’s positive UK PMI results which beat forecasts.
Manufacturing, construction and services PMIs all came in slightly better than expected with the key services sector avoiding an expected contraction to print a stagnant 50.0.
Canadian Dollar (CAD) Exchange Rate Gains Limited amid Oil Price News
Major currencies correlated to trade, as well as the US Dollar (USD), have advanced this week on fresh news that the US and China may be close to reaching a preliminary trade deal.
As a trade-correlated currency, the Canadian Dollar benefitted slightly from the positive US-China relations. However, gains were limited after
OPEC cut its oil demand forecasts, with predictions that demand will go down by 7% between 2019 and 2023.
As oil represents Canada’s biggest export, volatile oil market news weighed on demand for the currency.
On top of the predicted slump in demand for oil, the Canadian Dollar came under pressure from concerns that the Bank of Canada (BoC) could become more dovish if Canadian data continues to disappoint.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Outlook Focuses on Trade and Canadian Data
The Pound to Canadian Dollar (GBP/CAD) exchange rate slid this week, but the pairing could rebound if upcoming trade news or Canadian data disappoints investors.
If US-China trade relations suddenly worsen or oil prices fall further, these factors could weigh heavily on the trade-correlated Canadian Dollar and help GBP/CAD to rise.
Canada’s Ivey PMI will be published tomorrow, but the week’s most noteworthy Canadian data will be October’s job market report, due for publication on Friday.
If Canadian job stats fall short of forecasts, investors will become even more anxious that the Bank of Canada (BoC) will adopt a dovish outlook.
Bank of Canada (BoC) interest rate cut bets are also likely to influence Pound to Canadian Dollar (GBP/CAD) exchange rate movement in the coming sessions, with Thursday’s Bank of England (BoE) policy decision unlikely to make as much of an impact.