GBP/CAD Exchange Rate Sinks as Canadian Building Permits Increase
The Pound Canadian Dollar (GBP/CAD) exchange rate fell by nearly 0.5% today and is currently trading around CA$1.6815 on the interbank market.
The Canadian Dollar (CAD) rose against the Pound (GBP) following the publication of the Canadian housing starts figures for May, which rose above the consensus of 196.4k to 202.3k, restoring hopes in the economy.
Josh Nye, a Senior Economist at the Royal Bank of Canada, remained cautious, however, saying:
‘The six-month trend was also 202k, which is the slowest pace in more than two years. We expect starts will continue to slow gradually as the year progresses, albeit remaining at fairly solid levels.’
These were followed by the Canadian building permits figures for April, which also rose, exceeding forecasts by jumping by 14.7%.
The Pound, meanwhile, fell following the worse-than-expected UK GDP figures for April, which came in at -0.4%.
Yael Selfin, a Chief Economist at the accountants KPMG UK, said:
‘The hangover that’s followed the UK’s original exit date is proving stronger than anticipated. Today’s figures signal the UK economy is likely to experience more subdued growth for the rest of the year, marred by Brexit uncertainty.’
GBP/CAD Exchange Rate Drops as UK Growth Figures Disappoint
Sterling sank following the UK manufacturing production figures for April, which fell by -3.9%, while the annual figures also weakened at -0.8% – despite the forecast 1.3% increase.
Rob Kent-Smith of the Office for National Statistics (ONS), commented:
‘There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded.’
The UK industrial production figures also weakened, coming in at -2.7% and leaving many Pound traders jittery about the health of the UK economy.
Political news, however, has continued to hold back Sterling, with uncertainty surround both the future leadership of the Conservative Party and with Brexit.
Boris Johnson, the current favourite for the Tory leadership, and the former Foreign Secretary, has flared up controversy, however, stating that he’d be willing to hold back the Brexit ‘divorce’ bill as a bargaining chip with the EU.
This has left GBP traders jittery, with fears of a no-deal Brexit rising.
GBP/CAD Forecast: Sterling Could Rise on a Brexit Breakthrough
Sterling investors will be looking ahead to tomorrow’s printing of the UK ILO unemployment figures for April, which are expected to increase at 3.9%.
These will be followed by the UK average earnings excluding bonus figures for April, which are expected to hold at 3.3%.
‘Loonie’ traders will be bracing for any global economic developments, however, with the Canadian economy particularly sensitive to trade tensions between the US and China – with Canada being heavily reliant on trade with both countries.
The Pound Canadian Dollar exchange rate will, however, be driven by political developments surrounding Brexit, and any signs of a breakthrough could see the Sterling begin to claw back some of its losses.