GBP/CAD Exchange Rate Falls as BoC states ‘Accumulating Evidence’ of Temporary Economic Slump
The Pound Canadian Dollar (GPB/CAD) exchange rate sank today and is currently trading around $1.7046 on the interbank market.
The Canadian Dollar (CAD) edged higher against the Pound (GBP) following yesterday’s Bank of Canada (BoC) interest rate decision, which held steady at 1.75%.
The BoC commented that there had been ‘accumulating evidence’ that the slump at the end of last year, and the beginning of this year, was a temporary affair.
Brian DePratto, an Economist at TD Bank, commented:
‘Even as we’ve received some ‘wins’ in the form of the end of steel and aluminium tariffs, other trade conflicts are maintaining a haze over the economic outlook. Against this backdrop, a neutral stance … seems appropriate.’
‘Loonie’ traders will be awaiting today’s publication of the Canadian current account figures for the first quarter, and with any signs of improvement CAD could edge higher.
GBP/CAD Exchange Rate Falls as UK Car Production Slashed by Brexit Uncertainty
The Pound, meanwhile, has weakened following the news that UK car production had been slashed by nearly half, according to the Society of Motor Manufacturers and Traders (SMMT).
Mike Hawes, the Chief Executive at SMMT, commented:
‘Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation.’
In Brexit news meanwhile, the Labour leader Jeremy Corbyn has done a U-turn on his opinion regarding the possibility of a second referendum.
Mr Corbyn said:
‘Faced with the threat of no deal and a prime minister with no mandate, the only way out of the Brexit crisis ripping our country apart is now to go back to the people.’
However, the ongoing uncertainty surrounding Brexit and the future of the Conservative’s leadership is weighing on UK market confidence, preventing the Pound to gain against most of its major competitors.
GBP/CAD Outlook: ‘Loonie’ Could Rise On Positive GDP Figures
Pound investors will be awaiting the UK GfK consumer confidence figures for May, and any improvement could provide some uplift for the GBP/CAD exchange rate.
These will be followed by the UK consumer credit figures for April, which are expected to increase.
Canadian Dollar traders, however, will be awaiting the annualised GDP figures tomorrow, which are expected to rise by 1.2%, likely seeing the ‘Loonie’ rise above GBP.
Tomorrow will also see the Canadian industrial product price figures for April.
The GBP/CAD exchange rate will likely remain subdued as long as the Brexit uncertainty remains, and with no clear signs of direction coming from either major party – with Theresa May due to resign on 7 June – Sterling is likely to remain down against the ‘Loonie’.