GBP/CAD Exchange Rate Rangebound Despite Mixed Reports on Canada’s Economic Performance
The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.711.
The Canadian Dollar (CAD) struggled to gain against the Pound (GBP) despite Canada’s better-than-expected annual inflation for June. The figure shot up by the most in 9-years, leaving investors feeling more confident that the Canadian economy could be on the road to recovery.
Mark Chandler, the head of Canadian Fixed Income and Strategy at RBC Capital Markets, commented:
‘We know from the retail sales report yesterday, the flash estimate for June, as well as our own proprietary card spending data that you did get a bounce back in consumer spending in it looks to be early July that was above a year ago.’
‘[However, if] you believe the Bank of Canada, things are still going to be bumpy as we go along.’
Meanwhile, CAD has suffered on mixed-reports for the Canadian economy, with a Bloomberg/Nanos survey showing that many Canadians believe that the worst is yet to come for the nation.
However, the ‘Loonie’ has benefited from signs that oil-prices could head higher as hopes for a global economic recovery were boosted by confidence in recent Covid-19 vaccines, which showed a degree of success in human trials.
Pound (GBP) Steady as Post-Brexit Jitters Haunt UK Markets
The Pound (GBP) struggled today following reports that the UK Government could be expected to trade with the European Union on World Trad Organisation (WTO) terms. As a result, Sterling investors have become anxious of a hard-post-Brexit trade transition.
A senior source told The Daily Telegraph:
‘The Government has been making it clear for a while now that it is prepared for no deal. Britain isn’t going to budge on fundamentals like fishing rights, so it’s all in the hands of the EU.’
Meanwhile, Sterling’s gains have been capped by growing tensions between the UK and China, which could jeopardise post-Brexit trade opportunities.
Steven Lynch, the managing director of the British Chamber of Commerce in China, however, was more optimistic that the two powers could avoid further conflict.
Mr Lynch said:
‘We hope that British automotive manufacturers who both import vehicles into China and manufacture locally will not be targeted for the UK government’s decision.’
GBP/CAD Outlook: Could Post-Brexit Fears Continue to Drag Down Sterling?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK CBI Industrial Trends Survey for July. Any signs that the UK’s industrial sector remaining in negative territory would prove GBP-negative.
The Canadian Dollar (CAD) could continue to rise against GBP this week if oil prices continue to grow. Any improvement in risk-sentiment would also buoy the risk-averse ‘Loonie’.
The GBP/CAD exchange rate will likely remain subdued into the weekend with fears continuing to grow over the UK-EU Brexit situation. Any signs that the stalemate between the two countries could remain unresolvable would prove GBP-negative.