Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as UK Labour Market Slows
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained muted this morning, with the pairing trading at around CA$1.7011.
On Tuesday, data revealed that while the UK unemployment rate fell back to 3.8%, the number of people in work has fallen.
Today’s data showed that employment slumped by 58,000 in the third quarter, leaving Sterling under pressure as this is the largest drop in employment in four years.
This suggests that the UK labour market is showing signs of slowing ahead of December’s election, and further data revealed the number of vacancies fell, with the Office for National Statistics showing this was the largest quarterly decline since 2009.
Added to this, further data revealed that UK wage growth slowed in the three months to September, increasing by just 3.6% following the previous increase of 3.8%.
Canadian Dollar (CAD) Flat as Oil Prices Rise
At the start of the week, oil demand decreased as markets worried about the fallout from the US-China trade war.
At the weekend, US President Donald Trump said talks with Beijing were progressing ‘very nicely’ but would only make a deal if it was the right one for America.
The Canadian Dollar was left flat against the Pound as oil prices edged up on Tuesday, reversing yesterday’s losses.
Hopes US President Donald Trump would signal progress in US-China trade talks later today during his speech provided the ‘Loonie’ with an upswing of support.
Commenting on the President’s speech to the Economic Club of New York, Oil Analyst at Energy Aspects in Singapore, Virendra Chauhan said:
‘Positive commentary about a possible US and China interim trade deal certainly helps, but the fundamentals are supportive.
‘Six million barrels per day of refining capacity is due to return from turnarounds across November and December.’
Yesterday: Sterling (GBP) Rallies on Brexit Party Announcement
Sterling was able to hold onto Monday’s gains as the risk of a hung parliament decreased following announcements from the Brexit Party leader.
Nigel Farage said that his party could not contest seats the Conservatives won in the 2017 election, and would instead focus on challenging anti-Brexit politicians.
Following Farage’s announcement, the Pound rallied as investors saw this as reducing the chance of a Labour-led government which would cause further complications to Brexit.
Commenting on this, Sumitomo Mitsui Trust Bank market strategist, Ayako Sera noted:
‘Sterling’s move was notable while other currencies were quiet, mainly because the US market was closed.
‘It certainly is positive that the Conservatives got greater support. But with a month to go ahead of the Dec. 12 election, I’m not all that optimistic because I think anything can still happen.’
Pound Canadian Dollar Outlook: Will Weak UK Inflation Weigh on GBP?
Looking ahead to Wednesday, the Pound (GBP) could slump against the Canadian Dollar (CAD) following the release of the UK’s inflation rate.
If monthly inflation contracts in October and annual inflation falls further away from the Bank of England’s (BoE) 2% target, Sterling sentiment is likely to slide.
Meanwhile, the ‘Loonie’ is likely to react to further news on the US-China trade war front. If US President Trump signals trade talks are progressing it will likely cause the Pound Canadian Dollar (GBP/CAD) exchange rate to fall.