GBP CAD Exchange Rate Forecast To Rise, Outlook For GBP USD Rate Positive

Published: Friday, 17 May 2013 09:00 BST - Written by Ben Hughes

STORY LINK GBP CAD Exchange Rate Forecast To Rise, Outlook For GBP USD Rate Positive

The fortunes of the US Dollar and conditions in America’s vast labour market have been intertwined since the Federal Reserve stated last month that it would not be calling a halt to its controversial Quantitative Easing programme until the jobs situation in the States had improved considerably. This set up means that any employment data in the US is almost guaranteed to be market-moving. Yesterday afternoon’s European session provided a prime illustration of this when the latest edition of the weekly US Initial Jobless Claims data showed at a lower than anticipated level. The publication triggered significant price action for the Pound to US Dollar exchange rate (currency : GBP USD), sending the pair up from the 1.5100s into the 1.5300s.

The key data release today also comes from North America, in the form of April’s Canadian Consumer Price Index numbers. Expectations are that the Canadian figures will show a cooling in the rate of domestic price rises. Such an outcome may calm rumours surrounding a near-term normalisation of interest rates from their current ultra-low levels. This could harm the Pound to Canadian Dollar exchange rate (currency : GBP CAD), sending Sterling back up towards the 1.6000 level against its Canadian counterpart.

This afternoon’s US Michigan Confidence Survey is also likely to prompt traders to adjust their positions ahead of the weekend closedown. A poor showing from the latest edition of the closely-watched gauge of investor sentiment may cause market participants to shift out of the risk-laden Australian and New Zealand Dollars, sending the GBP AUD and GBP NZD rates sharply higher before tonight’s market close. The Kiwi Dollar has been under some selling pressure over the past week thanks to comments from the Antipodean nation’s policymakers confirming that the Reserve Bank of New Zealand has been actively stepping into the global currency markets to weaken the NZD.

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TAGS: American Dollar Forecasts Australian Dollar Forecasts Canadian Dolla Forecasts