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Pound Sterling to Canadian Dollar Exchange Rate Forecast: Can Higher Wage Growth Bring GBP/CAD Gains?

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Higher UK Average Earnings could Cause GBP/CAD Exchange Rate Rise

The Pound (GBP) has risen against the Canadian Dollar (CAD) today, trading at a level of CA$1.7042 in the pairing.

This appreciation comes from background optimism about the Brexit process, as GBP traders speculate about a potential breakthrough in negotiations.

Looking ahead, Pound Sterling could rise further against the Canadian Dollar on Tuesday next week when high-impact UK jobs data comes out.

The main announcements will be unemployment and wage growth figures for July; a higher jobless rate is forecast alongside a faster pace of earnings growth.

A higher unemployment rate would undeniably be bad news for the UK, but if the pace of wage growth rises in line with or above forecasts then the Pound could firm.

Rising wage growth would signify resilience among UK households and could raise the chances of a Bank of England (BoE) interest rate hike in the future.

Optimistic Forecast from Bank of England (BoE) could Boost GBP/CAD Exchange Rate

Beyond next Tuesday’s UK jobs market data, the Pound to Canadian Dollar (GBP/CAD) exchange rate could also be affected by Thursday’s BoE meeting.

BoE policymakers aren’t expected to adjust interest rates from 0.75%, but might still prompt a GBP/CAD exchange rate rise if they have a suitably optimistic outlook.

Brexit tensions are high among GBP traders, so the best-case scenario would be BoE officials giving reassurances about UK economic stability after leaving the EU.

Are Canadian Dollar to Pound (CAD/GBP) Exchange Rate Losses ahead on Higher Unemployment Rate?

The Canadian Dollar (CAD) is at risk of making additional losses against the Pound (GBP) before the end of the week, when key jobs market data comes out on Friday.

Out over the afternoon, Canada’s employment change figure for August is expected to show a 5k rise in employed persons, compared to a 54.1k rise seen in July.

This positive result could be eclipsed by the unemployment rate reading, which is expected to show a potentially damaging rise from 5.8% to 5.9%.

The Canadian unemployment rate fell from 6% to 5.8% in July, so a rise in August could panic Canadian Dollar traders because of the implications for future increases.

Future CAD/GBP Exchange Rate Forecast: Will Canadian Inflation Rate Slowdown Bring Canadian Dollar Decline?

September is looking like a quiet month in terms of Canadian domestic data, as after the jobs figures, the next major announcements aren’t due until 21st September.

These will be inflation rate readings for August – a slower pace of annual and monthly inflation is anticipated.

A reduction in Canadian inflation might benefit households and consumers, but could ultimately cause CAD/GBP exchange rate losses.

This is because lower inflation reduces the pressure on the Bank of Canada (BOC) to raise interest rates; an October rate hike is still penciled in by some economists.