The Pound Canadian Dollar exchange rate continued to hold its ground near its highest weekly levels on Thursday afternoon.
While demand for the Brexit-worn Pound was mixed and the currency fluctuated, a dip in demand for risky currencies and the continued selloff of oil prices left GBP CAD trending sturdily near its highs.
Federal Reserve official William Dudley stated on Thursday that he still expects a 2016 interest rate hike from the Fed, which bolstered Fed rate hike bets and the ‘safe haven’ US Dollar during Thursday’s American session. This caused risk-movements to be limited later in the day.
(Published 10:46 BST 20/10/2016)
The Pound Canadian Dollar exchange rate edged upwards on Thursday morning despite disappointing UK ecostats, as Wednesday and Thursday’s sessions left risk-demand and the Canadian Dollar weaker. GBP CAD has gained over a cent in value since the week began and is now comfortably trending in the region of 1.61.
Pound (GBP) Exchange Rates Undermined by Underwhelming Retail Report
While the Pound Canadian Dollar currency pair has fluctuated in recent days Pound (GBP) exchange rates have generally had a decent week so far, being bought across the board on Tuesday in response to news that MPs would likely be able to vote on the final Brexit deal before the leaving process is complete.
Since then, GBP has largely held its ground. Wednesday’s solid UK employment report revealed that employment was at a joint-record-high of 74.5% from June to August, which cheered UK markets slightly. Its influence on Sterling was minimal as the data was collected in a period before the effects of the Brexit vote could be felt.
Thursday’s disappointing UK retail sales data left the Pound slipping a little on Thursday morning, but despite sales coming in lower-than-expected in every print Sterling was still mostly flat.
This week’s data has stoked further speculation that British economic data is losing its effectiveness over an increasingly Brexit-correlated Pound.
Canadian Dollar (CAD) Struggles to Hold Ground as Risk-Demand Fades
While market factors supporting Canadian Dollar (CAD) exchange rates remained strong on Wednesday, the currency was unable to benefit from them as an Australian Dollar selloff kept demand for risky currencies at bay.
Wednesday’s session saw the Bank of Canada (BOC) holding its October policy meeting, at which the bank held a neutral tone on policy and cut its 2016 growth outlook.
The results of the meeting triggered a mixed reaction in markets, with some optimistic as the bank did not strongly indicate further easing was on the way but others disappointed that the bank still appeared to be far from taking up a tightening bias any time soon.
Prices of oil, Canada’s most lucrative commodity, finally dipped on Thursday after hitting their highest levels all year on Wednesday. Sentiment towards the commodity remains solid, but this dip put pressure on Thursday’s demand for risk.
Pound Canadian Dollar (GBP CAD) Long-Term Forecast: A Chance for Sterling to Recover?
Like with many of its other major currency rivals, the Pound has trended at multi-year lows versus the Canadian Dollar for the last few weeks.
However, unlike many of its other currency pairs, GBP CAD has been able to hold its weekly highs with little trouble this week due to various factors.
There are ways this trend could continue and see Sterling make a strong and sustained recovery against the Canadian Dollar in the coming months.
For example, while oil prices have rallied since OPEC member nations announced the intention to put a cap on oil production to stimulate demand, critics and some analysts have come out to say that the deal is unlikely to have a real lasting effect unless more non-member nations join the cuts.
If oil prices begin a longer-term downtrend from their current highs, the Canadian Dollar could see an extended period of weakness and Sterling could be given the breathing room to advance. However, this all depends on if market sentiment towards the OPEC deal turns to doubt in the coming weeks.
At the time of writing, the Pound Canadian Dollar (GBP CAD) exchange rate trended in the region of 1.61 while the Canadian Dollar Pound exchange rate traded at around 0.61.
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