Sterling has made a slight gain against the Canadian Dollar on Thursday after Bank of England Governor Mark Carney made a hawkish speech in Wales in which he said that a bank rate increase is getting closer. However, the gains are relatively fractional in comparison to other currencies despite an absence of Canadian data. This is likely as a result of the Canadian Dollar holding tightly on to the coat-tails of a bullish US Dollar.
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.8111.
Sterling made huge gains following the Unionist victory in the Scottish referendum. The gains were short-lived, however, after the surge in demand opened up some attractive selling positions which caused traders to lock in their profits. The downfall from the trader profit buying has continued over the course of the week with a lack of British market moving domestic data to curtail losses.
Further Sterling declination was as a result of Prime Minister David Cameron who said that the UK has no choice but to join in the battle against Islamic militants. The call for military action will be decided over the coming days in parliament.
The Canadian Dollar has been subject to intense volatility over the past week or so. Having recovered losses from commodity price cuts the Canadian Dollar was brought back down by rising geopolitical tensions and trader risk aversion strategies.
Further ‘Loonie’ losses came after Bank of Canada deputy Governor Timothy Lane made an impromptu statement. Lane said that the Canadian Dollar could potentially weaken and market interest rates may climb while the Federal Reserve normalises monetary policy. ‘Like the Fed, we will balance the risks of acting too soon and stifling burgeoning economic growth against the risks of acting too late and letting inflation overshoot and fuelling imbalances in our housing markets’.
Nick Exarhos, an economist at CIBC World markets in Toronto, commented stating; ‘The Bank of Canada appears to be suggesting again to markets it is comfortable in lagging behind policy shift coming from the Fed […] Today’s speech could have modest bearish implications on the ‘Loonie’, though the market has gotten used to a very dovish Bank of Canada.’
Those invested in the ‘Loonie’ (CAD) would have been pleased with Wednesday’s US housing data. New Home Sales increased above the market consensus from 427,000 to 504, 000. The jump in demand to build new houses could potentially lead to increased cross-border trade and the ‘Loonie’ appreciated as a result.
The Pound Sterling to Canadian Dollar exchange rate has hit a low today of 1.8067.
With an absence of Canadian economic data on Thursday the ‘Loonie’ has continued to trend higher against many of its currency competitors as it tracks the progress of the US Dollar.
On Thursday Bank of England Governor Mark Carney gave a speech in Wales. The speech was well received having been interpreted as hawkish in regards to monetary policy normalisation. ‘With many of the conditions for the economy to normalise now met, the point at which interest rates also begin to normalise is getting closer,’ Carney said in a speech today in Newport, Wales. ‘While there is always uncertainty about the future, you can expect interest rates to begin to increase’.
The Pound Sterling to Canadian Dollar exchange rate has reached a high today of 1.8157.
Forecast for the Pound to Canadian Dollar Exchange Rate
Friday 26th September
Despite an absence of economic data on Friday the Canadian Dollar could fall after Thursday’s US Services PMI failed to meet with the market consensus.
Friday’s British data is relatively inconsequential and shouldn’t affect the Sterling uptrend from Thursday’s Carney speech.
Monday 29th September
Monday will see several British economic data publications with the potential to spark volatility. Net Consumer Credit, Net Lending Sec. on Dwellings and Mortgage approvals will all be of interest to those invested in the pound.
Tuesday 30th September
Alike Monday there are a number of British domestic data releases with the potential to provoke Sterling movement. The GfK Consumer Confidence Survey and second-quarter Gross Domestic Product will be ones to watch.
Tuesday’s Canadian economic data will be of high importance as a gauge of the Canadian economic standing and the provocation of volatility. The Yearly Gross Domestic Product came in at 3.1% previously.
Wednesday 1st October
Wednesday’s solitary Canadian domestic data publication will be of interest to those invested in the ‘Loonie’. The RBC Canadian Manufacturing PMI came in at 54.8 previously.
Thursday 2nd October
Thursday’s British data publication will be an interesting gauge of the British economic standing. The Construction PMI is important because the UK are attempting to transition from a consumption-based economy to an export-led economy.
Friday 3rd October
Friday’s singular Canadian domestic data release won’t hold a great deal of significance in terms of initiating ‘Loonie’ volatility. International Merchandise Trade is expected to fall from 2.58 billion (Canadian Dollars) to 1.50 billion.
Conversely, there will be a couple of British data publications which ought to bring about Sterling movement. The UK Services PMI is of high importance because the majority of the British economy is led by services. The Composite PMI will also be of interest to those invested in Sterling.
UPDATE
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.8150.
Following the Bank of England Governor Mark Carney’s hawkish speech on Thursday the Pound made impressive gains against its major traded currency peers. It has since softened fractionally which could be attributed to either trader profit locking, or fears over the likelihood of British military action in Syria and Iraq.
With a lack of data the Canadian Dollar is struggling against weak risk sentiment and a softer US Dollar.
