GBP/CAD Exchange Rate Falls as UK Manufacturing Contracts
The Pound Canadian Dollar (GBP/CAD) exchange rate fell today, leaving the pairing fluctuating around CA$1.600.
The Pound (GBP) fell against the Canadian Dollar (CAD) after today’s interest rate decision from the Bank of England (BoE), which held at 0.75%.
However, the UK central bank warned that a no-deal Brexit would damage the economy and see a further drop in Sterling. It also warned about a one-in-three chance of a recession following Brexit.
Mark Carney, the Governor of the BoE, also added during his statement:
‘Similarly preparations by governments and businesses for no deal are vital to reduce the potentially damaging transition costs to a WTO relationship with the EU.’
‘But those preparations cannot eliminate the fundamental economic adjustments to a new trading arrangement that a no-deal Brexit would entail.’
Sterling also fell following today’s publication of the UK Markit Manufacturing PMI for July, which remained in contraction territory at 48.
Duncan Brock, a Group Director at the Chartered Institute of Procurement and Supply, said:
‘A killer combination of economic uncertainty and the weakest production levels for seven years, battered the manufacturing sector into contraction for the third consecutive month in July.’
CAD/GBP Exchange Rate Edges Higher as Canadian Manufacturing Improves in July
The Canadian Dollar benefited from today’s publication of the Canadian Markit Manufacturing PMI for July, which rose out of contraction territory to 50.2, despite the 49.5 forecast.
Tim Moore, an Economists Associate Director at IHS Markit, said:
‘July data provides some encouragement that the downturn in Canadian manufacturing production has started to lose intensity, with the latest survey pointing the slowest drop in output for four months.’
The ‘Loonie’, however, has recovered from yesterday’s fall following hawkish comments from the US Federal Reserve, which indicated that the central bank would not continue cutting rates going forward.
Traders fled to the US Dollar safe haven, which left the ‘Loonie’ wanting as US markets heaved a sigh of relief.
GBP/CAD Outlook: Could the Canadian Dollar Rise Higher on Positive Construction PMI?
Canadian Dollar traders will be looking ahead to the Canadian international merchandise trade figures for June, which are expected to ease from $0.76 billion to $-0.30 billon.
Tomorrow will also see the publication of the UK Markit Construction PMI for July, which is expected to improve slightly from 43.1 to 46.
However as the Index remains in contraction territory, this is unlikely to provide any uplift for Sterling.
The GBP/CAD exchange rate is likely to remain subdued however as Brexit uncertainty continues to weigh on market confidence in the Pound.