Pound to Canadian Dollar Exchange Rate Currently Limp as Both Currencies Lack Drive
A lack of Brexit developments has left the Pound (GBP) far less volatile, but the Canadian Dollar (CAD) has been unable to capitalise and the Pound to Canadian Dollar (GBP/CAD) exchange rate is on track to end this week close to its opening levels.
After opening this week at the level of 1.7402, GBP/CAD briefly tumbled to a two-month-low of 1.7322 on Monday before rebounding.
While the Pound was unable to sustain any strong gains against the Canadian Dollar, GBP/CAD had recovered most of its weekly losses and trended closely to the level of 1.7393 at the time of writing on Friday morning.
The Pound has been limp amid a lack of fresh Brexit news, and the latest UK data hasn’t had a big impact on the currency’s outlook either.
However, as the Bank of Canada (BoC) took a more cautious shift on monetary policy this week, the Canadian Dollar’s outlook has dampened which could weigh on its potential for gains in the coming weeks.
Pound (GBP) Exchange Rates Lack Drive as Brexit Uncertainties Dominate
The Pound is on track for a bearish week, as concerns rise that there is unlikely to be much optimistic development in the Brexit process any time soon.
UK Prime Minister Theresa May’s negotiations to reach a Brexit compromise with opposition Labour Party are being perceived as having made little progress, and analysts still don’t see a path to how the Brexit solution can be reached.
While UK data is decent, expectations that Brexit uncertainty may be ongoing for another half a year is keeping the Pound outlook gloomy.
Analysts note that the extended Brexit process means a longer period of underwhelming domestic productivity and growth.
Ultimately the latest data has had no impact on the perceived period of Brexit uncertainty, and the Pound still saw limp movement.
Canadian Dollar (CAD) Exchange Rates Limp Following Cautious Bank of Canada (BoC)
Weeks of strong performance in the Canadian Dollar (CAD) came to an end this week, as the latest Bank of Canada (BoC) policy decision was more cautious than hoped about global growth and Canada’s economic outlook.
On Wednesday afternoon, the Bank of Canada announced that Canadian monetary policy would be left frozen – as was widely expected.
However, significantly the bank dropped signals about upcoming interest rate hikes from its policy statement. This caused BoC interest rate hike bets to slump and briefly caused a sharp Canadian Dollar selloff.
Towards the end of the week the Canadian Dollar’s strength steadied slightly, as BoC Governor Stephen Poloz indicated that interest rate hikes could resume if upcoming data indicates that the ongoing global economic slowdown was temporary.
This helped the Canadian Dollar to avoid major losses versus a weak Pound this week.
On top of Bank of Canada jitters, the trade-correlated Canadian Dollar’s strength has also been limited due to weaker risk-sentiment this week. Prices of oil, Canada’s most lucrative commodity, have been sliding as well.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Investors Refocus on Canadian Data
With the Bank of Canada’s (BoC) Governor Stephen Poloz noting that the chances of further interest rate hikes depends on Canadian data, Canada’s upcoming ecostats are likely to influence the Canadian Dollar (CAD) outlook in the coming week.
The first big event for Pound to Canadian Dollar (GBP/CAD) exchange rate investors next week will be Canada’s February growth rate report on Tuesday.
Canadian growth is expected to have slowed from 0.3% to 0.1% month-on-month, but if the data shows a smaller slowdown than expected the Canadian Dollar would see a jump in demand.
The same could be said for Canada’s April manufacturing PMI from RBC, due for publication on Wednesday.
Of course, if these stats fall short of forecasts they are likely to lead to Canadian Dollar losses instead.
The Pound, on the other hand, is unlikely to see much shift in trajectory unless next week’s UK PMIs or Bank of England (BoE) decision are particularly surprising.
Any big unexpected Brexit developments would also influence the Pound to Canadian Dollar (GBP/CAD) exchange rate’s movements.