The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate jumped from a low of 1.9882 to a high of 2.0256 during the local session as the Bank of Canada (BOC) slashed borrowing costs to 0.5%.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate News: UK Employment Data Sees Pound Slip, But Falling Oil Prices Keep ‘Loonie’ Soft
During the European session the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate declined in response to the UK’s latest employment data.
Economists had been hoping for strong jobs growth and average earnings figures to bolster yesterday’s remarks from Bank of England (BoE) Governor Mark Carney regarding borrowing costs being increased in the first quarter of 2016.
However, the UK was shown to have lost rather than gained positions in the three months through May, with the number of people in employment falling by -67,000 rather than climbing 35,000 as expected.
This resulted in the unemployment rate rising from 5.5% to 5.6%.
Another disappointment came in the form of below-anticipated wage growth figures, with earnings climbing by less than projected both including and excluding bonuses. That being said, wages still climbed at the fastest pace for five years.
ONS statistician Nick Palmer commented; ‘Today’s figures show the first quarterly fall in employment and the first rise in unemployment for over two years. So it’s possible that the rate of improvement in the labour market that we have seen over the last three years may have eased off, though it is much too early to be certain.’
The Pound initially softened against a number of its currency counterparts after the report was published but managed to claw back the majority of its losses as trading continued.
The Canadian Dollar was also trending lower as a result of oil prices tumbling on the Iranian nuclear deal.
BOC Cuts Interest Rates as Canadian Recession Forecast, Canadian Dollar to Pound Sterling (CAD/GBP) US Dollar (CAD/USD) Exchange Rates Decline
Later in trading the Pound Sterling to Canadian Dollar (GBP/CAD) surged to its highest level for seven years as the Bank of Canada (BOC) opted to cut borrowing costs.
Given that Canada has posted four consecutive months of economic contraction this year and is on course to enter recession for the first time since 2009, the move was largely expected by economists.
However, it still had a profound impact on demand for the ‘Loonie’ and the commodity-driven currency plummeted.
Canada and the UK now both have the same 0.5% benchmark interest rate.
After the decision was announced BOC Governor Stephen Poloz observed; ‘While vulnerabilities associated with household imbalances remain elevated and could edge higher, Canada’s economy is undergoing a significant and complex adjustment. Additional monetary stimulus is required at this time to help return the economy to full capacity and inflation sustainable to target.’
Will the Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Hold at 7-Year Highs? Latest Future Currency Forecast
There are no further notable UK reports scheduled for publication this week, but if oil prices continue to struggle the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to remain trending at seven-year highs.
Canadian reports could also impact GBP/CAD trading, with any negative numbers putting the ‘Loonie’ under additional pressure.
The Canadian data to be most aware of is Friday’s Consumer Price Index. Slowing inflation would be Canadian Dollar-negative.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 2.0219 and the Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate was trending in the region of 0.4948