GBP/CAD Exchange Rate Rangebound as Canadian Banks Cut Growth Forecasts
The Pound Canadian (GBP/CAD) exchange rate is steady today and is currently trading around CA$1.7011 on the interbank market.
The Canadian Dollar (CAD) held steady against the Pound (GBP) as the US-China trade war weighs on economic forecasts in Canada, with two major banks slashing their growth predictions.
Economists at the Bank of America Merrill Lnych, commented in a note:
‘We had already marked downside risks to our GDP growth forecast for 2019 given lower oil prices and risks of trade war escalation.’
‘With the U.S. threat of tariffs to Mexico, trade wars have effectively escalated, and uncertainty over global trade increases, which is negative for Canadian investment and exports.’
‘Loonie’ traders will be looking ahead to today’s Canadian labor productivity figures for the first-quarter, which are expected to improve.
However, with global trade tensions remaining in focus, it is unlikely that we shall see the CAD/GBP exchange rate have any sudden uptick.
GBP/CAD Exchange Rate Steadies as UK Services Sector Improves
The Pound, meanwhile, remained generally subdued against many of its competitors following the release of the UK Markit services PMI figures for May, which rose above the consensus of 50.6 to 51.0.
Chris Williamson, the Chief Business Economist at IHS Marikit, remained cautious, however, saying:
‘Companies reported that activity, order books and hiring were all subdued by a combination of weak demand – both in domestic and overseas markets – and Brexit-related uncertainty.’
Sterling has remained generally unsteady during the US President Donald Trump’ state visit, which has eclipsed much else political news in the UK – despite Theresa May’s departure as Conservative leader as soon as this Friday.
With no clear direction for Brexit, this has left many Pound traders remaining cautious during the course of this week.
GBP/CAD Outlook: Brexit and Conservative Leadership to Remain in Spotlight
CAD investors will be looking ahead to tomorrow’s publication of the Canadian international merchandise trade figures for April, which are expected to improve against March’s figures.
These will be followed by the Canadian Ivey purchasing managers index figures for May, which are expected to ease.
However, many ‘Loonie’ traders will be focusing closely on US-China trade tensions, and with any signs of a breakthrough between the two superpowers, this could benefit the trade-sensitive Canadian Dollar.
Pound traders, meanwhile, will be focusing on Brexit developments as well as the future of the Conservative leadership, and with both hanging in a state of uncertainty, it is unlikely that we should see any dramatic improvement in the GBP/CAD exchange rate this week.