GBP/CAD Exchange Rate Buoyed by Revised GDP
The Pound Canadian Dollar (GBP/CAD) exchange rate edged higher at the start of this week’s session as markets responded to the UK’s latest GDP release.
At the time of writing the GBP/CAD exchange rate is trading at around CA$1.6298, slightly up from this week’s opening levels.
Revisions to UK First Quarter Growth Lifts the Pound (GBP)
The Pound (GBP) ticked higher on Monday, in response to the final release of the UK’s GDP figures for the second quarter.
According to data published by the Office for National Statistics (ONS), UK economic growth contracted by 0.2% in Q2, in line with previously readings.
However, the accompanying annualised figures contained a welcomed surprise, with first quarter growth being revised up to 0.6%, propelling annual growth up from 1.2% to 1.3%.
The ONS reported that the strong showing in the first quarter was mostly down to stockpiling ahead of the original Brexit deadline, with growth subsequently faltering as businesses sold off their inventories rather than make new orders.
While Sterling was buoyed by the news, it may struggle to consolidate its gains, especially as the risk remains that the UK could slip into a recession this year.
Retreating Oil Prices Limit Appeal of the Canadian Dollar (CAD)
Meanwhile the Canadian Dollar (CAD) struggled to hold its ground against the Pound (GBP) today as the oil-sensitive ‘Loonie’ was undermined by sliding crude prices.
Prices for Brent crude fell as low as $60 a barrel at the start of the week in response to easing tensions in the Middle East.
Oil products account for roughly 20% of Canada’s total exports, so shifts in prices will often influence AUD exchange rates.
GBP/CAD Forecast: UK Politics to Inject Fresh Volatility in Sterling?
Looking ahead, the Pound to Canadian Dollar (GBP/CAD) exchange rate may face more volatility this week as a result of ongoing political uncertainty.
The Conservative party conference and the possibility of MP’s calling a no-confidence vote in the government could keep GBP investors on their toes this week, with Sterling likely to remain highly sensitive to headlines.
Also likely to influence GBP exchange rates this week will also be the UK’s latest PMI figures, where another set of gloomy figures could limit the appeal of Sterling.
For CAD investors the focus is likely to be on Canada’s latest GDP release tomorrow afternoon, with the ‘Loonie potentially facing some pressure if domestic growth slowed in July as forecast.