Pound to Canadian Dollar Exchange Rate Rebounds as Canadian Manufacturing Falls Short
Update 15:48 BST 17/09/2019:
While the Pound (GBP) remained volatile and pressured by Brexit uncertainties, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate rebounded this afternoon.
Investors found the Pound more appealing as soft Brexit speculation rose once again, and the Canadian Dollar (CAD) was weakened by the day’s disappointing Canadian manufacturing report.
Canadian manufacturing sales contracted by -1.3% in July, well below the forecast -0.2%. The data caused speculation that the Bank of Canada (BoC) could become more dovish after all.
Pound to Canadian Dollar Exchange Rate Continues to Tumble on Brexit and Oil Jitters
Following last week’s surge, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has already shed a good chunk of those gains since markets opened yesterday. The Pound (GBP) is being weighed by Brexit fears while surging oil prices boost the Canadian Dollar (CAD).
After opening last week at the level of 1.6180, GBP/CAD soared as the Brexit outlook appeared to improve, and the pair ended the week at the level of 1.6612.
However, after briefly touching on a two month best of 1.6615 yesterday, GBP/CAD began to tumble back from those highs and has already shed almost two cents. At the time of writing on Tuesday, GBP/CAD trended close to the level of 1.6423.
Pound (GBP) Exchange Rates Outlook Remains Clouded by Brexit Uncertainties
The formal Brexit date is now just a month and a half away, investors are once again becoming anxious about the lack of perceived progress on the possibility of a Brexit deal being made.
Sterling surged last week amid MP attempts to prevent a no-deal Brexit, as well as speculation that the UK government and the allied DUP Party could soften their positions on Brexit to secure a deal.
While these Brexit hopes caused a Friday surge in the Pound though, the gains were short-lived as many analysts predicted.
Since yesterday, the government’s lack of progress on Brexit has gotten investors anxious about the possibility of a no-deal Brexit again, and the Pound has tumbled.
Canadian Dollar (CAD) Exchange Rates Climbing as Oil Prices Surge
Over the weekend, a shock drone attack on Saudi Arabia’s biggest oil processing facility hit headlines. Since yesterday, markets have been reacting to the news.
The affected oil plant and oil field account for 5% of the globe’s oil output, and the predicted delay of activity from the plant is expected to cause significant impact on the oil market and consumption overall.
Oil prices surged 14% on major supply concerns yesterday. A sharp move like this is normally only seen during war or economic crises.
Canada is an oil-exporting nation, and the Canadian Dollar has a correlation to prices of oil. As a result, the Canadian Dollar advanced in reaction to the surging oil prices.
Oil prices are overshadowing other Canadian news for now, but hopes that the Bank of Canada (BoC) will avoid a dovish stance on Canada’s economic outlook are also supporting CAD.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Remains Focused on Geopolitics
Brexit developments and oil price movements influenced by geopolitics are likely to remain the focus for the Pound to Canadian Dollar (GBP/CAD) exchange rate in the coming sessions.
With less than a month and a half until the current Brexit date, Pound investors are highly anxious about the possibility of a no-deal Brexit and these fears will limit the British currency’s potential for gains.
Upcoming UK inflation data and retail data, and even the Bank of England’s (BoE) September policy decision on Thursday, may not influence much Pound movement unless they surprise investors.
The Canadian Dollar will continue to be influenced by shifts in oil price but is also likely to be influenced by upcoming Canadian data, due to market focus on Bank of Canada (BoC) speculation.
If today’s Canadian manufacturing data, tomorrow’s inflation data or Friday’s retail sales data beat expectations, the Pound to Canadian Dollar (GBP/CAD) exchange rate could fall lower as BoC interest rate cut speculation would lighten.