As Monday’s session progressed, the Pound (GBP) exchange rate continued to advance against the Canadian Dollar (CAD) as oil prices continued to fall.
Earlier on Monday the Pound to Canadian Dollar (GBP/CAD) exchange rate firmed slightly and is forecast to continue to edge higher as concerns over the global economy were heightened following comments by UK Prime Minister David Cameron and the news that Japan has slid back into recession. Demand for riskier commodity based assets slipped as a result.
Last week the Pound to Canadian Dollar (GBP/CAD) exchange rate weakened to a 3-month low on Friday as construction data weighed on Sterling and better than forecast manufacturing data supported the ‘Loonie’.
Sterling continued to fall against the majority of its major peers including the US Dollar and Euro as disappointing construction output data added to Wednesday’s Bank of England disappointing inflation report and Thursday’s house price data.
According to the Office for National Statistics, UK construction output, increased by a slower pace than forecast in September. Construction output grew by 1.8% on a month on month basis, reversing a 3% decline in August, Economists had been forecasting for faster growth of 4%.
The Canadian Dollar strengthened on Friday as oil prices made a slight recovery and as economic data showed that factory sales increased more than forecast in September.
According to the Ottawa based Statistics Canada, factory sales increased by 2.1% to a total of C$53.0 billion, reversing the revised 3.5% seen in August. Economists had been expecting sales to increase by 1%. The rise was the eighth gain in nine months.
Bank of Canada Governor Stephen Poloz should be ‘comforted by the broadening in activity away from the energy complex that will face significant headwinds heading into the end of the year,’ David Tulk, chief Canada macro strategist at TD Securities in Toronto, wrote in a research note.
The rise was down to an increase in transportation equipment with sales rising by 9.5% to C$9.9 billion.
‘US economic outperformance will always have a strong positive effect on Canadian exports and broader output,’ said Nick Exarhos, an economist at CIBC World markets in Toronto.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The Pound is forecast to remain under pressure next week as UK economic data due next week is likely to show that the UK economy is slowing and confirm investor concerns that the Bank of England will not raise interest rates until late next year.
Wednesday’s, BoE inflation report continues to weigh and is likely to keep the Pound weaker well into next week.
‘Unless Sterling recovers over the next couple of days, it’s in for a tough time over the next week or two. Some banks were expecting something slightly more hawkish … and by not veering down that route Mark Carney pulled the rug out from under Sterling,’ said Ian Gunner, an economist from Altan Wealth.
Traders will now be looking ahead to Tuesday’s UK retail sales data and Wednesday Bank of England minutes release.
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,0.5651 ,
Canadian Dollar,,US Dollar,0.8837 ,
Canadian Dollar,,Euro,0.7094 ,
Canadian Dollar,,Australian Dollar,1.0148,
Canadian Dollar,,New Zealand Dollar,1.1164 ,
US Dollar,,Canadian Dollar,1.1314 ,
Pound Sterling,,Canadian Dollar,1.7695 ,
Euro,,Canadian Dollar,1.4096 ,
Australian Dollar,,Canadian Dollar,0.9855,
New Zealand Dollar,,Canadian Dollar,0.8957 ,
[/table]
