Looking ahead, Pound Sterling could advance against the Canadian Dollar on Friday, when UK GDP figures for Q2 2018 are due for release.
These readings are expected to confirm a faster pace of economic activity during the second quarter, which could lead to clear GBP/CAD exchange rate gains.
Although preliminary figures are pointing to faster GDP growth, a proper confirmation could still raise GBP trader confidence and boost Pound Sterling demand.
Next Week’s GBP/CAD Forecast: Will PMI Data Cause Pound to Canadian Dollar Exchange Rate Turbulence?
In the coming week, the Pound to Canadian Dollar exchange rate (GBP/CAD) could be affected by UK PMI readings out over Monday to Wednesday.
These stats will cover manufacturing, construction and services sector activity and may cause initial GBP/CAD gains before a later loss.
The manufacturing and construction PMIs are expected to show increased activity in September, but the most important reading, services, is tipped to show a slowdown.
The Pound could rise if the first two PMIs match forecasts, but as the services sector contributes the most to UK economic growth, Sterling could drop if the last PMI falls.
Risk of Canadian Dollar to Pound Sterling Exchange Rate Decline on Fed Rate Hike
The Canadian Dollar (CAD) is at risk of falling against the Pound (GBP) in the near-future, when the US Federal Reserve holds a monetary policy meeting this evening.
Fed policymakers are widely expected to hike interest rates from 2% to 2.5%, which could cause a sharp rise in the US Dollar’s value.
As a consequence of this, Canadian Dollar demand could fall because of reduced risk sentiment.
The Canadian Dollar is a commodity currency, which in this case means that its value is partly tied to crude oil trading.
The US Dollar is a more stable currency by comparison, so if interest rates are raised as expected then the Canadian Dollar could take a dive against the Pound.
Will BOC Speech and Canadian GDP Stats Push CAD/GBP Exchange Rate Higher?
Beyond any potential losses caused by the upcoming Fed interest rate decision, the Canadian Dollar could recover and firm against the Pound later this week.
Thursday will bring a speech from Bank of Canada (BOC) Governor Stephen Poloz, who might reassure CAD traders and raise demand for the Canadian currency.
In the best case scenario, Mr Poloz might back a future interest rate hike; this is a possibility as higher interest rates would boost competitiveness with the US.
After Mr Poloz speaks on Thursday, the Canadian Dollar could also be supported by Friday’s GDP reading.
Covering economic activity in July, this data could boost Canadian Dollar demand if it shows a forecast-matching rise from 0% to 0.1%.