Following a mysterious ‘flash crash’ yesterday evening, the Pound Canadian Dollar (GBP CAD) exchange rate has begun to trend higher again today as UK factories reported stronger than expected orders last month.
According to a survey published by the Confederation of British Industry (CBI) the British industrial orders balance leapt from +4 to +9 in April, reaching the highest levels in two-years.
Firms reported that output growth saw its fastest rise since the end of 2013 thanks to an upbeat performance from the mechanical engineering and chemicals sector and that rising domestic demand and robust foreign orders helped UK factories maintain high levels of production.
However, some analysts warned that despite the rise in the UK’s industrial sector it may only have a small impact on GDP as it is dwarfed by Britain’s services sector.
Howard Archer, Chief European & UK Economist at IHS Markit said;
‘It needs to be borne in mind that manufacturing output only accounts for 10.3% of UK GDP and that surveys on the sector have recently tended to be stronger than the hard data.’
Meanwhile, the Canadian Dollar has been able to slow the Pound’s advance thanks to a further rise in oil prices on Friday.
WTI crude prices rose 71 cents to $50.06 a barrel today, breaking the $50 a barrel barrier for the first time in three weeks, following an Organization of the Petroleum Exporting Countries (OPEC) meeting on Thursday.
Prices are now headed towards a second week of gains following growing market optimism that OPEC and other major oil producing countries like Russia will agree to extend current production cuts to the end of the year as they attempt to lower global supplies.
However, the ‘Loonie’ was unable to completely repel Sterling after a disappointing CPI report this afternoon which showed that Canadian inflation held at 1.6% in April, failing to rise to 1.7% as economists had predicted.
Looking ahead the GBP CAD exchange rate may stumble at the start of next week as the UK’s latest Public Sector Borrowing figures are expected to show that the public deficit grew again in April.
Meanwhile the Canadian Dollar’s movement will be dictated by the tone of the Bank of Canada’s (BoC) policy meeting next week, with the ‘Loonie’ likely to soften if the bank adopts a more dovish outlook towards future policy.
Current Interbank Exchange Rates
At the time of writing the GBP CAD exchange rate was trending around 1.7668 and the CAD GBP exchange rate was trending around 0.5655.