The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate strengthened by around 0.33% on Tuesday afternoon.
Early in Tuesday’s European session the Pound declined versus the majority of its most traded currency peers amid speculation the referendum on the European Union will be bought forward to 2016. However, the Pound recovered most of those early losses in response to positive domestic data which showed manufacturing output reached a 6-month high.
The Canadian Dollar, meanwhile, softened versus most of its major peers despite crude oil prices climbing. This is due to a combination of slightly damp trader risk sentiment amid fears that Greece will not secure bailout funds before running out of cash.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.8904.
Pound Sterling (GBP) Exchange Rate Forecast to Advance versus US Dollar on Industrial Output
Although the prospect of an earlier-than-expected EU referendum weighed on demand for the Pound, the British asset strengthened versus many of its major peers on Tuesday. In an effort to quell mounting tensions in the Tory back bench with a growing number of Euro-sceptics, the Prime Minister could bring the referendum on Britain’s membership in the European Union forward to 2016. A certain amount of time will be required, however, for George Osborne to negotiate changes to the current relationship.
The Sterling uptrend can be connected to better-than-expected domestic data. On the year, March’s Industrial Production eclipsed the market consensus of 0.1% growth with the actual result showing a 0.7% increase. Additionally, Manufacturing Production grew by 1.1% on the year in March, bettering the median market forecast of a 1.0% increase.
Howard Archer, chief economist at IHS Global Insight, said: ‘Now that the general election is out of the way and political uncertainty is less of a factor, the prospects for manufacturers seem pretty healthy on the domestic demand front, especially for consumer goods.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has fallen to a low of 1.8785 today.
Canadian Dollar (CAD) Exchange Rate Forecast to Soften versus the Euro as Market Sentiment Dampened
Although Greece’s IMF repayment supported the notion that Greece will do all that it can to stay as part of the Eurozone, the continued geopolitical tensions have far from abated. Therefore, market sentiment is still relatively rocky which has seen soft demand for the risk-correlated ‘Loonie’ (CAD).
The declination has been somewhat laboured, however, thanks to rising crude prices. ‘We had a strong recovery of the US Dollar in the last few trading session but we saw a reverse this morning,’ said Myrto Sokou, senior analyst at Sucden Financial. ‘The weaker Dollar is providing support for [oil] prices.’
However, most analysts feel that the oil price gains will be capped amid oversupply concerns. This is weighing on demand for the Canadian Dollar. ‘While low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals,’ the US investment bank said.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Gains ahead of UK Growth Estimate
As traders await the British gross domestic product estimate for April, due for publication later on Tuesday afternoon, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold gains.
Wednesday could see heightened GBP/CAD volatility with the Bank of England (BoE) Inflation Report due for publication. This will likely see the BoE outline the monetary policy strategy it will be pursuing under a conservative government.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate reached a high of 1.3601 today.
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