GBP/CAD Exchange Rate Rises on Positive Wages and Strong Jobs Data
The Pound Canadian Dollar (GBP/CAD) exchange rate edged higher today, leaving the pairing trading around CA$1.600 after UK average earnings figures for June rose to an 11-year high, increasing from 3.6% to 3.9%.
As a result, Sterling traders have been buoyed on renewed optimism in the UK economy, as increased wages will bolstered consumer spending in the near-term.
UK unemployment rate figures for June, however, rose above expectation from 3.8% to 3.9%, although this is still relatively low in historic terms.
Tej Parikh, the Chief Economist at the Institute of the Directors (IoD), commented:
‘The jobs market remains a source of strength for the UK economy, though it may now be reaching its peak.’
‘High employment has proved a lifeline for the economy in a difficult period. With so many people in work, solid household incomes have kept consumer spending fairly buoyant while the production and construction sectors have waned.’
Brexit uncertainty has held back some of the Pound’s gains today, as renegotiations on the Irish backstop have been rejected by the Irish Taoiseach Leo Varadkar in talks set to go ahead in September with British Prime Minister Boris Johnson.
Canadian Dollar to Pound Exchange Rate Sinks on Rising
The Canadian Dollar (CAD) has continued to struggle on heightened global political tensions, leaving ‘Loonie’ investors concerned about the outlook for the export-reliant Canadian economy.
Eric Theoret, a Currency Strategist at Scotiabank, said:
‘Markets are concerned about Hong Kong and Argentina … so high-risk, growth-sensitive currencies like the Mexican peso, Australian dollar and Norwegian krone are all weakening, and the Canadian dollar is also soft, although to a lesser extent than its peers.’
US President Donald Trump has left untouched his plan to impose $300bn of tariffs on Chinese imports, further exacerbating fears of an ongoing global trade war.
Shi Yinhong, an International Relations Professor at China’s Renmin University, commented:
‘The chances for cooperation are very limited. The issues that China believes it can work on with the US are not given priority in Trump’s diplomatic agenda.’
GBP/CAD Outlook: UK Inflation Figure for July in Focus
Pound traders will be looking ahead to tomorrow’s UK inflation figures for July, which are expected to ease from 2.0% to 1.9%.
Tomorrow will also see the publication of the UK retail price index figures for July.
Any signs of an increase could further bolster confidence in the UK’s economy.
Meanwhile, Canadian Dollar investors will be focusing on global trade developments, any with any indications of US-China trade tensions easing, we could see the ‘Loonie’ claw back some of its losses.
The GBP/CAD exchange rate is likely to remain fixated on Brexit developments, however, and with any further indications of a breakdown of Brexit negotiations between the UK and the EU could send the Sterling down against the Canadian currency.