For much of the week the Pound to Canadian Dollar (GBP/CAD) has been trading in a softer position as the Bank of England’s newly dovish interest rate stance dragged Sterling lower.
While the Canadian Dollar has been fluctuating as a result of shifting commodity prices, disappointing US data and ongoing tensions in the Middle East, the ‘Loonie’ still spent much of the week in a stronger position against the Pound.
However, after the BoE published its Financial Stability Report on Thursday the British asset was able to recoup much of its previous losses.
The Pound to Canadian Dollar (GBP/CAD) exchange rate climbed while the GBP/USD pairing strengthened 0.2% and the GBP/EUR pairing jumped 0.4%. The Pound pushed back above technical resistance against the Euro, fluctuating around the 1.25 mark.
In the Financial Stability report the BoE outlined new measures for dealing with the UK’s overheating housing market, and as the potential procedures would take a gradual approach the Pound was supported by the development.
The central bank asserted that without a fresh take on mortgage policy; ‘the risk of excessive household indebtedness is material. The policy package is targeted to mitigate this risk in a prudent and proportionate fashion.’
The Pound to Canadian Dollar (GBP/CAD) exchange rate remained ever-so-slightly higher after the release of Canadian average weekly earnings figures. Average weekly earnings advanced by a negatively revised 2.6% in March, year-on-year, and were up 3.3% in April.
In comparison with the lacklustre wage growth seen in the UK, this was a fairly upbeat report. It showed that wages in Alberta rose most, with average weekly earnings climbing to $1,141.70. In a statement issued with the data Statistics Canada noted; ‘Gains in the province were widespread in most sectors, and were notable in mining, quarrying and oil and gas extraction. Large earnings growth was also observed in transportation and warehousing as well as retail trade.’
Last week Canada’s Consumer Price Index and Retail Sales report came in above expected levels, so this is the latest in a line of fairly impressive reports for the North American nation.
As investors are hoping that the Bank of Canada will soon adopt a less dovish bias, today’s report was welcome.
Tomorrow sees the release of Canada’s Industrial Product Price and Raw Materials Price Index. If the reports impress, the Canadian Dollar could end the week on high. However, stagnation is expected for the former index, with the latter index predicted to decline by 0.1%.
The Pound to Canadian Dollar (GBP/CAD) exchange rate could also be affected by the UK’s final first quarter growth data. Economists believe that tomorrow’s report will confirm that the British economy expanded by 0.8 per cent in the three months through March.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5484,
Canadian Dollar,,US Dollar,0.9339,
Canadian Dollar,,Euro,0.6858,
Canadian Dollar,,Australian Dollar,0.9929,
Canadian Dollar,,New Zealand Dollar,1.0656,
US Dollar,,Canadian Dollar ,1.0715,
Pound Sterling,,Canadian Dollar,1.8232,
Euro,,Canadian Dollar,1.4568,
Australian Dollar,,Canadian Dollar,1.0079,
New Zealand Dollar,,Canadian Dollar,0.9383,
[/table]
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