GBP/CAD Exchange rate Edges Higher as UK Construction Sectors Rallies
The Pound Canadian Dollar (GBP/CAD) exchange rate is showing signs of lift again this morning as markets react to the latest UK construction PMI.
At the time of writing the GBP/CAD exchange rate is holding close to today’s opening levels, although is around half a cent up from the two-month low struck overnight.
Sterling (GBP) Exchange Rate Firms as UK Construction Activity Rebounds
The Pound (GBP) exchange rate is making efforts to rally against the Canadian Dollar this morning as investors welcome the uptick in the UK’s latest construction PMI.
According to data published by IHS Markit, the UK’s construction PMI rose from 47 to a five-month high of 52.5 in April, beating expectations of a more modest rebound to 50.5.
While the uptick in activity brought some welcome relief for the GBP/CAD exchange rate, analyst warned into reading too much into April’s figures, warning that the fundamentals of the sector remain weak.
Tim Moore, Associate Director at IHS Markit said:
‘A consistent theme so far this year has been fragile demand conditions and subdued volumes of incoming new work.
Survey respondents noted that heightened economic uncertainty continued to hold back construction growth in April, with risk aversion among clients leading to delays with spending decisions on new projects.’
Canadian Dollar (CAD) Exchange Rate Resilient as Poloz Hints as Rate Hike
At the same time the Canadian Dollar (CAD) remains in a position of relative strength this morning, limiting the impact of Sterling’s (GBP) rally, thanks to a hawkish speech by Bank of Canada (BoC) governor Stephen Poloz late on Tuesday.
In a speech to the Yellowknife Chamber of Commerce, Poloz suggested the domestic economy was nearing full capacity and hinted that higher interest rates would be needed in due time.
Poloz said yesterday:
‘The economic progress we have seen makes us more confident that higher interest rates will be warranted over time.’
GBP/CAD Exchange Rate Forecast: Uptick in Service Sector Activity may Extend Sterling Rally
Looking ahead the Pound exchange rate may be able to extend its gains on Thursday with the publication of the UK’s latest services PMI.
Economists forecast the UK’s service sector will have also picked up the pace last month, with the services index expected to have climbed from 51.7 to 53.5 in April.
Meanwhile the Canadian Dollar may strengthen in the latter half of this week following the release of Canada’s latest trade balance, with analysts predicting that the domestic trade deficit will have narrowed slightly in March.