‘Loonie’ (CAD) Holding Bullishness despite Lower Canadian Manufacturing Output Ahead of UK Construction PMI
In spite of a weakening on the Canadian Manufacturing PMI the ‘Loonie’ (CAD) has continued to extend gains against many of the majors. As a result the GBP/CAD conversion rate is currently trending in the region of 2.0035.
Earlier…
In spite of the UK’s Manufacturing PMI printing at a higher level than had been forecast, the GBP/CAD exchange rate has remained on a downtrend today due to persistent ‘Loonie’ (CAD) strength.
Rising Canadian GDP Saw ‘Loonie’ (CAD) Buoyed as Stalled Fed Interest Rate Hike Bets Prompted Profit Taking
While oil prices have continued to slump this week, with global benchmark Brent crude once again trading below $48, the ‘Loonie’ (CAD) entered a distinct rally on Wednesday thanks to a greater improvement on the Canadian Gross Domestic Product than had been anticipated. Bettering forecasts, the July figure clocked in at 0.8% rather than 0.7% to stoke a rise in optimism for traders of the Canadian Dollar. A stronger outlook for the local economy suggests that the negative impacts of the wider global slowdown may not be as severe as feared; coupled with persistent uncertainty over the odds of an imminent interest rate from the Fed, this led the GBP/CAD conversion rate to strongly downtrend throughout the day.
UK Manufacturing PMI Less Dovish than Expected Today Supports Pound (GBP), GBP/CAD Pairing Fails to Climb on Limited Sentiment
After the finalised second quarter UK GDP was revised downwards to 2.4% from 2.6%, the Pound (GBP) was left relatively softened. Although the domestic Current Account showed a greater narrowing of the deficit than forecast, to the encouragement of Bank of England (BoE) hawks, this was ultimately not a strong enough stimulus to counteract the buoyance of the ‘Loonie’.
Thursday has seen the release of a slightly more positive UK Manufacturing PMI which printed at a smaller decrease than pundits had anticipated. Nevertheless, this slowing of growth in the domestic industry was not of particular reassurance as experts reacted poorly to the revelation. As a result, the GBP/CAD pairing continued to shed value, still weighed down by a fresh round of profit taking on the rising Canadian Dollar.
GBP/CAD Exchange Rate Forecast: Positive Upcoming US Data May See Decline in Demand for the ‘Loonie’
Should tomorrow’s UK Construction PMI demonstrate a decided improvement, the fortunes of Sterling could pick up, as increasing expansion in the construction industry would help to shore up the composite PMI figure as well as the nation’s next GDP reading. With an increase already forecast, this may provide the substantial rallying point which the GBP/CAD currency pair is in need of.
Although there will be no further Canadian data releases before the weekend, the ‘Loonie’ could see some volatility as the US Unemployment Rate and Change in Non-Farm Payrolls figures are published. Given the particular importance these indicators are afforded by the Federal Open Market Committee (FOMC) in evaluating interest rates, a strong showing here may reignite speculation of a 2015 Fed rate hike. Such an outcome would undoubtedly put pressure on the more vulnerable Canadian Dollar, to the benefit of its rivals.
Current GBP, CAD Exchange Rates
At time of writing, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was slumped in the range of 2.0084, while the Canadian Dollar to Pound Sterling (CAD/GBP) pairing continued to advance around 0.4973.
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