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Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Rises Following Worse-than-expected Canadian Retail Sales

GBP/CAD Exchange Rate Rallies as Canadian Retail Sales Slide

This morning former UK Chancellor, George Osborne, said that a delay to the UK’s departure from the European Union was the ‘most likely’ option.

Following this the Pound Canadian Dollar (GBP/CAD) exchange rate rallied, with the pairing currently trading at an inter-bank rate of CA$1.7438.

Meanwhile, this afternoon saw the release of Canadian retail sales figures for November, which fell further than expected.

Retail sales fell by -0.9% from the previous month’s growth of 0.2%, with Statistics Canada reporting this decline was mostly down to lower car sales. The report stated:

‘Lower sales at gasoline stations and motor vehicle and part dealers. Excluding these two subsectors, retail sales increased by 0.2%.’

Following this data release Sterling continued to rise against the ‘Loonie’.

Yesterday: Pound (GBP) Jumps after Record High UK Employment Figure Released

Yesterday the Pound surged against the Canadian Dollar following the release of the UK’s unemployment and average earnings for November.

The unemployment rate for the UK fell to 4%, with the amount of people looking for work falling to a 40-year low and unemployment in Scotland also hitting a record low of 3.6%.

Average earnings in the UK continues to outpace inflation, with November’s average earnings figure sitting at 3.3% (excluding bonuses); including bonuses the figure performed better, rising to 3.4%.

This saw British wage growth hit an 11-year high, which then likely fuelled the Pound’s rally on Wednesday against CAD.

Risk-Sensitive Canadian Dollar (CAD) Slips as US-China Trade Tensions Continue

The US Department of Justice has said in a statement that they are going to pursue the extradition of Huawei’s Chief Financial Officer from Canada, further stating that:

‘We greatly appreciate Canada’s continuing support in our mutual efforts to enforce the rule of law.’

This is likely going to lead to further tensions between the US and China, which could see risk-sensitive currencies such as the ‘Loonie’ suffer, as Canada’s arrest of Ms Meng has already resulted in rising diplomatic tensions between China and Canada.

Data released on Tuesday also pointed towards evidence that Canada’s economy slowed at the end of 2018, as factory sales decreased by 1.4%, and wholesale trade fell by 1%, which likely fuelled the Canadian Dollar’s slip against Sterling on Tuesday.

GBP/CAD Outlook: Will CAD Slide on Further Reports of Meng Wanzhou’s Extradition?

As there is a lack of notable Canadian or British data to be released towards the end of the session, it seems likely that the continuation of Brexit discussions and whether or not MPs will support Theresa May’s ‘Plan B’ will remain the main catalyst for movement of the pairing.

Any further reports of it being likely that there will be a delay in the UK leaving the EU, or support for May’s withdrawal agreement, are likely to see the Pound rally against the Canadian Dollar.

Nevertheless, if there are any significant reports of tensions between the US and China cooling, we could see increased sentiment for the ‘Loonie’, although any further reports about the extradition of Huawei’s CFO are likely to see the risk-sensitive Canadian Dollar slip.