Exchange Rate Movement Fluctuates as Both Canadian Dollar (CAD) and Pound (GBP) Rally Today
Following pledges by Beijing for increased intervention in the faltering Chinese stock market, which hit its worst low since 2007 on Monday, the ‘Loonie’ (CAD) saw a pick-up in its fortunes along with the other commodity currencies. However, as the UK’s second quarter GDP release came in on target this morning these gains are likely be lost as the Pound (GBP) rapidly rallies once again.
At time of writing the GBP/CAD exchange rate is trending upwards in the region of 2.0295.
Plummeting crude oil prices have softened the Canadian Dollar, boosting the Pound Sterling to Canadian Dollar (GBP/CAD) pairing towards a new seven-year high.
‘Loonie’ (CAD) Bullish in Wake of Retail Sales Figures but GBP/CAD Exchange Rate Shored Up By Sinking Oil Price
Thursday gave a positive outcome for the Canadian month-on-month Retail Sales data, in contrast to less than satisfying equivalent figures from the UK, pushing the GBP/CAD exchange rate down to 2.0180. Canada reported a sales increase of 1.0%, higher than the expected 0.6%, where the UK registered -0.2%, instead of equalling last month’s 0.4% growth.
While the Pound had continued to cruise strongly following Wednesday’s latest meeting minutes from the Bank of England’s (BoE) Monetary Policy Committee (MPC) gathering, some of the wind was taken from its sails by this result. Recovering relatively quickly, however, the pairing soon rebounded to return to trending towards a seven-year high.
Unfortunately for Canada’s commodity currency the global economic slowdown has continued in earnest, as China’s manufacturing PMI was revealed on Friday to be significantly lower than expected. Indicative of the current climate, this prompted commodity prices to plummet further on Friday, with crude oil hitting a three-month low. As supply repeatedly outpaces demand things do not look good for the export-reliant ‘Loonie’.
Canadian Dollar (CAD) Suffers as Confidence in Economic Improvement Decreases, Pound (GBP) Begins to Follow Suit
Economists had been predicting a rebound for crude oil prices in the second half of 2015, a turn of events which would be a saving grace for the struggling Canadian Dollar. However the increasing glut, paired with a slowing pace of output in one of the world’s main energy consumers, casts doubt on the accuracy of that expectation.
Commodity sell-offs continue into the beginning of this week with no signs of slowing, weakening more risk-sensitive currencies across the board.
Meanwhile the resurgence in Sterling triggered by the BoE minutes has undeniably begun to tail off, with speculators questioning the likelihood of an imminent interest rate increase in light of the Chinese slowdown.
Faltering faith, even after better than expected mortgage approval numbers from the UK, has already begun to take its toll on the Pound, sending it falling against many of its rivals. Nevertheless this has failed to have a particular effect on the GBP/CAD pairing, which recovered from an early morning dip to 2.0147 in order to continue moving upwards towards highs not seen since 2008.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast: UK, Canadian GDP Reports Offer Potential for Rallies
With both the UK and Canada expecting the release of GDP data later this week there should be a fair degree of movement in store for the GBP/CAD pairing. Sterling will strongly benefit should the forecast result of 2.6% annual expansion be either met or exceeded, bolstering itself on a demonstration of improving economic health.
A shortfall for Canada would also be a significant boost to the GBP/CAD exchange rate, a situation that seems somewhat more likely given the current trend in the commodity markets. However, a rally for the ‘Loonie’ is not out of the question if the figures ultimately reveal growth as opposed to the forecast neutral 0.0%.
As of writing the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 2.0279.