Pound to Canadian Dollar Exchange Rate Edges Higher on Oil Prices
Update 16:45 BST 03/09/2020:
The Pound to Canadian Dollar (GBP/CAD) exchange rate rebounded a little from its lowest levels this afternoon. The pair trended in the region of 1.7437 at the time of writing.
This was despite a lack of fresh demand for the Pound (GBP), as well as some strong Canadian data in the past week.
The GBP/CAD gains were largely due to weaker prices of oil, Canada’s biggest export.
Canada’s trade deficit also widened according to the latest trade balance report. However the trade deficit did not fall as wide as analysts predicted.
(Originally published 11:42 BST 03/09/2020)
Pound to Canadian Dollar Exchange Rate Slips despite Mixed Oil Price News
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has been sliding this week. This is despite the British currency’s gains on US Dollar (USD) weakness, as well as weaker oil prices weighing on the Canadian Dollar (CAD).
Sterling (GBP) capitalised on US Dollar (USD) weakness last week to push GBP/CAD up two cents, from the level of 1.7248 to 1.7488.
While this week’s movement has been more mixed so far, GBP/CAD did briefly touch on a high of 1.7548 earlier in the week. This was the best level for GBP/CAD in around a month, since the beginning of August.
Since then though, GBP/CAD has slipped from those highs and trends closer to the level of 1.7390 at the time of writing on Thursday – almost a cent below the week’s opening levels.
Canadian Dollar investors are eagerly awaiting Friday’s American session, when the week’s notable Canadian job market data will be published.
Pound (GBP) Exchange Rates Weaker as Services PMI Falls Short
The Pound had been benefitting from broad weakness in the US Dollar (USD) for much of the past week, but as the US Dollar rebounds from lows, the Pound’s rally also runs out of steam.
Investors have been even more hesitant to rally in the Pound again since yesterday, when Bank of England (BoE) policymakers indicated that the tone taken in August may have been too optimistic.
Today’s session has followed with Britain’s final August services PMIs. The data, from Markit, fell short of projections at 58.8.
Concerns that UK businesses could see surges in redundancies in the coming months are weighing on optimism in the services sector.
Canadian Dollar (CAD) Exchange Rates Rise with US Dollar (USD)
The Canadian Dollar has seen strong performance in recent weeks. A combination of strong Canadian ecostats, as well as rising prices in oil, Canada’s biggest export, have bolstered market demand for the currency.
However, even as oil prices weaken in recent sessions, the Canadian Dollar continues to advance. It has been benefitting from this week’s market rebounds to claw back some ground against the Pound.
The Canadian Dollar often sees correlation with the US Dollar (USD), due to the closeness of the Canadian and US economies.
According to Strategists at Scotiabank:
‘Expect the CAD to generally track the broader tone of the USD for now … that might mean the CAD can regain a bit more ground on the crosses,’
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Canadian Job Market Report
Friday will see the publication of this week’s most influential Canadian dataset. Canada’s August job market report will be published during the American session, and Canadian Dollar investors are eagerly awaiting the data.
If Canada’s August job market data is worse than expected and hints that the coronavirus has hit jobs harder than expected, the Canadian Dollar could be in for weaker performance.
Canada’s unemployment rate is expected to improve to 10.1%, so a higher figure here could be concerning for Canadian Dollar investors.
As for the Pound, the British outlook remains gloomy on concerns over the government’s handling of the coronavirus pandemic and Brexit. Sterling is unlikely to see much major shift in movement unless it is caused by rival currencies.
Next week’s key UK growth rate report could also influence the Pound’s outlook if it surprises investors.
Of course, any surprising developments in global or domestic coronavirus outlooks could also influence the Pound to Canadian Dollar (GBP/CAD) exchange rate.