Pound Canadian Dollar Exchange Rate Jittery as Markets Await Key Data
The Pound Canadian Dollar (GBP/CAD) exchange rate has seen mixed movement this week so far. Investors are pulling back slightly on both currencies following last week’s strength in both, and markets now await tomorrow’s key growth data.
Sterling (GBP) and the Canadian Dollar (CAD) have both strengthened and weakened almost in tandem over the past half a month.
Last week, GBP/CAD saw highly mixed movement as both currencies strengthened, opening the week at 1.7350 and closing a little higher at 1.7390.
This week so far, both currencies are weakening a little instead. At the time of writing on Tuesday, GBP/CAD is trending a little below the week’s opening levels in the region of 1.7343.
Pound (GBP) Exchange Rates Remain Supported by UK Coronavirus Recovery Hopes
In recent weeks, the Pound’s rally on coronavirus pandemic recovery hopes has softened somewhat. As optimism is priced into the Pound outlook, the British currency lacks the drive to keep seeing stronger gains and push to new highs against some stronger rivals.
According to You-Na Park-Heger, Strategist at Commerzbank:
‘Even though Sterling is going to be able to benefit from the projected end of the pandemic short-term, medium-term we remain sceptical about Sterling,’
While Sterling remains appealing overall, it is struggling to climb against the Canadian Dollar, which is also appealing.
This week, investors are softening on the Pound slightly after weeks of strong performance.
Canadian Dollar (CAD) Exchange Rates Pull Back on Oil Prices, US Bond Yields
The Canadian Dollar has also softened slightly this week, after weeks of strong performance. This CAD weakness comes from various factors and is making it easier for GBP/CAD to avoid losses today.
Prices of oil, Canada’s biggest export, have been falling since the Suez Canal finally reopened for traffic, after a large container ship had been blocking the key trade route for almost a week.
As the Canadian Dollar is often correlated to oil prices, this has been weighing on CAD.
The Canadian Dollar is also weakening due to rising US bond yields. This is because they are making the US Dollar (USD) comparatively more appealing.
Pound US Dollar (GBP/CAD) Exchange Rate Awaits Tomorrow’s Growth Reports
Wednesday will be a key session for the Pound to Canadian Dollar exchange rate, as UK and Canadian growth rate results are both expected to be published.
UK growth rate data from Q4 2020 will be published during the European session. If the growth data beats forecasts, it could bolster the Pound’s appeal as it would make investors even more optimistic about the UK outlook.
Similarly though, if Canada’s January growth rate beats forecasts markets could become more optimistic about Canada’s economic resilience and outlook.
UK business investment data is also due tomorrow. Then, Thursday will follow with Markit manufacturing PMI data from March, for both the UK and Canada.
With both currencies taking a breather today, the Pound Canadian Dollar (GBP/CAD) exchange rate could see a shift in direction later in the week if upcoming UK or Canadian data surprises investors.