Rising Risk Appetite Limits Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Support
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate failed to hold onto its bullish form ahead of the weekend as market risk-appetite picked back up.
News of fresh Chinese economic stimulus helped to shore up the risk-sensitive Canadian Dollar (CAD) on Friday morning.
As stronger levels of Chinese growth could fuel an increase in global oil demand CAD exchange rates found a foothold, even though worries over the ultimate health of the oil market remain.
With the Federal Reserve expected to come under further pressure to cut interest rates, weakening the US Dollar (USD), the Canadian Dollar found additional support.
Although Labour confirmed its intention not to vote in favour of a general election this was not enough to prevent Pound Sterling (GBP) losing some of its earlier momentum, meanwhile.
Rising Canadian Employment Forecast to Boost Canadian Dollar (CAD) Exchange Rates
Demand for the Canadian Dollar could pick up further on the back of August’s set of domestic labour market data.
Forecasts point towards a solid rebound in the headline net change in employment figure, with an increase of 20,000 set to almost completely reverse the previous month’s decline.
Evidence that the Canadian labour market tightened last month would give the Bank of Canada (BOC) greater incentive to leave interest rates on hold for longer.
Even if the unemployment rate fails to show any shift on the month a higher level of employed Canadians could still help to buoy CAD exchange rates.
On the other hand, another decline in employment levels may fuel existing anxiety over the strength of the Canadian economic outlook.
GBP Exchange Rates Vulnerable to Lacklustre Signs of UK Growth
Fresh pressure could be in store for GBP exchange rates next week with the release of the latest UK gross domestic product report.
If signs continue to point towards the economy contracting in the third quarter, signalling a technical recession, the Pound is likely to fall further out of favour.
Unless the UK can demonstrate greater signs of economic resilience investors may struggle to find incentive to buy into the Pound after its recent rally.
A fresh decline in July’s UK industrial and manufacturing production figures could also put pressure on the Pound, with the sector having already shown signs of a sustained slowdown.
Without the support of domestic data the GBP/CAD exchange rate may remain biased to the downside as political developments continue to unfold.