Pound to Canadian Dollar Exchange Rate Forecast: GBP/CAD to Near Monthly High if Canadian Data Disappoints
Updated 16:43 BST 05/06/2018:
On Tuesday afternoon, the Pound to Canadian Dollar (GBP/CAD) exchange rate briefly touched its best levels in almost a month as investors reacted to some weaker-than-forecast Canadian data.
Canada’s Q1 labour productivity report was forecast to have improved from 0.2% to 0.3%, but instead contracted at -0.3%.
Following the report, GBP/CAD briefly jumped to a high of 1.7426. This was the pair’s best level since early May. However, towards the end of Tuesday’s European session the pair trended closer to the level of 1.7380 again.
[Published 14:21 BST 05/06/2018]
Pound to Canadian Dollar Exchange Rate Hits Fortnight-High as UK Services Impress Traders
Stronger than expected UK data has given investors a reason to buy the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate this week, despite the Canadian Dollar (CAD) being supported by Bank of Canada (BoC) speculation lately.
Last week, lower market demand for risky trade-correlated currencies like the Canadian Dollar helped GBP/CAD to climb from 1.7251 to 1.7285.
On Monday, GBP/CAD briefly dipped to a low of 1.7204, but on Tuesday Britain’s latest services PMI bolstered the pair and GBP/CAD hit a high of 1.7366. This was the best GBP/CAD level in over two weeks.
Canada’s domestic outlook has been generally optimistic, but the currency has been weighed by global trade uncertainties making riskier currencies less appealing.
As a result, Pound to Canadian Dollar exchange rate investors are looking ahead to Canadian trade data due on Wednesday, as well as Bank of Canada comments later in the week.
Pound (GBP) Exchange Rates Bolstered as UK Services PMI Beats Forecasts
Signs that Britain’s economy rebounded more than expected from a poor performance in the first quarter of the year have left the Pound (GBP) more appealing this week.
Following better-than-expected UK manufacturing and construction PMI results in recent sessions, Britain’s key services PMI also beat forecasts.
UK services were forecast to have risen just slightly, from 52.8 to 53. However, the services figure unexpectedly jumped to 54.
As services make up a notable chunk of Britain’s economic activity, the report boosted hopes that Britain’s economy was improving again.
Still, analysts remained cautious about Britain’s economic outlook. Markit’s services report indicated that inflows of new work remained subdued, indicating that growth could still slow again in the coming months.
Persistent Brexit uncertainties persist too, with markets anxious about the seemingly little progress made in UK-EU negotiations so far this year.
Canadian Dollar (CAD) Exchange Rate Losses Limited on Bank of Canada (BoC) Outlook
While the Pound to Canadian Dollar (GBP/CAD) exchange rate has climbed to its best levels in weeks on Tuesday, the pair may have climbed even higher if the Canadian Dollar hadn’t been supported by recent domestic news.
Last week, the Bank of Canada (BoC) took a relatively hawkish tone on Canada’s monetary policy outlook, bolstering market hopes that the bank was still planning to hike interest rates once or twice before the end of 2018.
Canadian ecostats have been mixed but generally positive. While Canada’s Q1 annualised growth rate failed to meet expectations, March’s growth rate was actually stronger than expected at 0.3%.
Canada’s latest manufacturing PMI also impressed, climbing from 55.5 to 56.2 rather than slipping to the forecast 55.4.
Still, Canadian Dollar demand may have been stronger if not for market risk-aversion in recent weeks, with investors still anxious that US protectionism could spark a global trade war.
Pound to Canadian Dollar (GBP/CAD) Forecast: Canadian Trade Report in Focus
The Canadian Dollar could see stronger demand later in the week if upcoming Canadian ecostats impress, or if investors find risky currencies more appealing again.
There is a lack of notable UK data due for publication for the remainder of the week, so Brexit news and Canadian data is more likely to drive GBP/CAD.
Wednesday will see the publication of Canada’s April trade balance report. Canada’s trade deficit is forecast to have narrowed from C$-4.14b to C$-3.4b throughout the month.
If Canadian export figures impress, investor concerns about the impact of US-Canada trade jitters may lighten and the Canadian Dollar could strengthen again.
Bank of Canada (BoC) news could influence Canadian Dollar trade too. BoC Governor Stephen Poloz will hold a speech on Thursday. If he shows any notable changes in tone regarding monetary policy, it could impact BoC bets and CAD trade.
However, perhaps the week’s most influential Canadian data will be published on Friday.
Canada’s May unemployment rate is forecast to remain at 5.8%, but if the rate impresses or the employment change figure beats expectations the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook would slip.