With a particularly sparse economic calendar this week traders are looking further than domestic data to gauge currency movement.
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.8055.
Last week was frustrating for Sterling which seesawed from record lows to bullish runs. The week ended with Sterling bearish against nearly all of its major peers, and the hangover has continued into this week given the lack of data to provoke movement.
The mounting uncertainty surrounding the Scottish bid for independence has also put traders off as they avoid the Pound for less risky currencies.
Sterling’s general downward trend can also be attributed to the increasingly poor performance of the Eurozone. Given the strong trading relationship between the Uk and the Eurozone it is unsurprising that bad Eurozone domestic data results weigh heavily on demand for the Pound Sterling.
Friday of last week saw a number of negative domestic data results pertaining to Canadian economic standing and the strength of the ‘Loonie’ (CAD). The Consumer Price Index and Core Consumer Price Index both failed to meet expectations having dropped below forecast figures.
The combination of the negative Canadian data and a bullish US Dollar had softened the Canadian Dollar considerably versus most of its major peers.
Tuesday of this week, however, saw a slight reversal in fortune for the Canadian economy and the ‘Loonie’ has generally been trending higher since. The fast-food giant Burger King announced the intention to buy Canadian coffee and doughnut chain Tim Hortons. The announcement saw shares in both companies rocket almost immediately.
The Canadian Dollar is likely to benefit considerably as all of the Canadian based restaurants will require the ‘Loonie’ for refurbishment. A writer for Cape Breton Post confirms this stating; ‘The ‘loonie’ has been pushed higher in the past by big corporate deals. That’s because a foreign buyer acquiring a Canadian company will need Canadian currency to close the deal, boosting demand for the Canadian Dollar on financial markets’.
The Pound Sterling to Canadian Dollar exchange rate hit a low today of 1.8034.
Having had nothing in terms of domestic data to alter the general course; Pound Sterling has continued to trend low against many of its major peers. This is likely to be due to the waning demand for European currencies as traders favour less risky Asian currencies.
Forecast for the Pound to Canadian Dollar Exchange Rate
In terms of market moving domestic data; neither the UK nor Canada will have anything of note until Friday.
The UK Nationwide House PX data will be of interest to those backing the Pound. Year-on-year figures are expected to grow by 10.2% having shown previous growth of 10.6%.
Friday is particularly important for the Canadian Dollar with the publication of Canadian Gross Domestic Product data. Year-on-year Canadian GDP is forecast to have grown by 3.0% having only posted growth by 2.3% previously.
The Pound to Canadian Dollar exchange rate has hit a high today of 1.8122
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