The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced by around 0.48% on Tuesday afternoon while the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range.
The Pound strengthened versus many of its peers on Tuesday after declining significantly on Monday. Dovish comments from Bank of England (BoE) Chief Economist Andy Haldane caused the initial depreciation, but Sterling recovered some of its losses after UK Consumer Confidence data bettered estimates.
The Canadian Dollar, meanwhile, advanced versus many of its peers in response to rising crude oil prices. The high value of the US Dollar is also supporting demand for the ‘Loonie’ (CAD) as it delays the prospect of a Federal Reserve rate hike which would widen the divergence between the neighbouring assets. However, a poor result from Canadian growth data has seen early gains lost as the European session progressed.
The US Dollar advanced versus many of its competitors as geopolitical tensions in Europe saw heightened demand for safe-haven currencies. US Consumer Confidence data printed positively which aided demand for the US asset.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9465.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5721.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Gain on Canadian GDP
As explained above, the Pound slumped versus many of its peers after Haldane stated that a benchmark interest rate cut is just as likely as a rate hike. He also warned against the danger of increasing the rate too early with major economies still scarred from the most recent recession. ‘A policy of early lift-off could be self-defeating,’ Haldane said in a lecture which he intends to deliver to students at the Open University on Tuesday. ‘Looking ahead, I have no bias on either the size or the direction of future interest rate moves,’ he added.
However, positive domestic data on Tuesday has seen the Pound rebound a little versus its peers. GfK Consumer Confidence was expected to increase from 1 to 2 in June, but actually advanced to 7. The better-than-expected result is likely the combination of accelerated wage growth and ultra-low interest rates. In addition, the final annual figure for first-quarter British Gross Domestic Product was upwardly revised from 2.4% to 2.9%.
The Canadian Dollar, meanwhile, advanced versus many of its peers in response to rising crude oil prices as Iran nuclear talks enter deadline day. However, prices are forecast to resume bearishness. ‘In case of contagion from Greece the economies of other peripheral countries—Spain, Italy, and Portugal—will suffer, resulting in downward revisions to regional economic growth which, in turn, will lead to lower global GDP forecasts,’ analysts at PVM brokerage said. ‘Oil demand will be impacted which will put further downward pressure on prices.’ ‘Loonie’ (CAD) gains were short lived, however, after Canadian growth data failed to impress. On the year, April’s Gross Domestic Product came in at 1.2% despite predictions it would hold at 1.5%.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 1.9450 – 1.9540 today.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Trend within Limited Range despite Positive US Data
The US asset advanced versus most of its competitors on Tuesday despite having registered disappointing domestic data results on Monday. The appreciation is the result of dampened market sentiment amid geopolitical unrest in Greece causing heightened demand for safe-haven assets. The US appreciation has been somewhat sluggish; however, as rate hawks are still considering the possibility of delayed cash rate increases. The fact that the US asset is gaining from safe-haven demand will be a bitter pill for the Federal Open Market Committee (FOMC) to swallow as they have voiced concern that Dollar overvaluation will hinder economic progress.
Given that he FOMC have become so data dependent, Consumer Confidence had a significant impact on ‘Greenback’ volatility. With Consumer Confidence bettering the median market forecast figure, there is a possibility that rate hawks will bring forward bets as to the timing of a Federal Reserve rate hike.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5691 – 1.5745 today.
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