CAD Dollar Exchange Rate Today - GBP Down vs Canadian Dollar and Maintains Negative Outlook

June 23, 2014 - Written by Ben Hughes

STORY LINK CAD Dollar Exchange Rate Today - GBP Down vs Canadian Dollar and Maintains Negative Outlook

The Canadian Dollar to Pound exchange rate was holding steady on Tuesday as it continued to find support from last week’s better than forecast retail sales and inflation data. The currency is also benefitting from increased oil prices in the wake of the conflict in Iraq.

Due to a lack of market moving domestic data for the two currencies there is likely to be limited movement forecast for the GBP/CAD currency pair.

The forex positions for the CAD in relation to the other key currencies are:

- the Pound Cdn Dollar exchange rate is 0.19 per cent lower at 1.82099 GBP/CAD.
- the Euro Cdn Dollar exchange rate is 0.02 per cent higher at 1.46221 EUR/CAD.

The CAD followed its other commodity based peers higher against the GBP as positive data released in China eased fears of a slowdown in the world’s second largest economy.

Early in the morning China released its latest HSBC manufacturing purchasing manager’s index data which showed that business activity at China’s factories has begun to expand following six months of slowdowns.

The HSBC manufacturing purchasing managers’ index came in at 50.8 in June, up from a final reading of 49.4 in May. It was the first time in six months that the index has climbed above the 50 level which separates expansion from contraction in six months.

The Pound Sterling to Canadian Dollar exchange rate is 0.19pct lower today at 1.82099 GBP/CAD.

Against the US Dollar the ‘Loonie’ advanced to its best level in five months and made further gains against the already weakened Euro. The Chinese data also boosted demand for the Australian and New Zealand Dollars.

“If China’s growing at a faster than anticipated pace, that’s likely good for commodities. Obviously the upward trend in CAD is strong, but I do think there are limits. Part of the fallout will absolutely on speculators that have stubbornly held to their bets against the currency. Some of those must be capitulating at this point,” said Camilla Sutton, chief currency strategist at Bank of Nova Scotia.

The CAD Dollar up on stronger inflation rate

The Canadian Dollar was also continuing to benefit from last Friday’s data release which showed that Canada’s inflation rate advanced by 2.3% in May on a year-on-year basis.

The data increased expectations that the Canadian Central Bank would raise interest rates, a move that will further strengthen the currency.

It was the first time in more than two years that the annual inflation rate exceeded the Bank of Canada’s 2% target, fuelling optimism over the economic recovery.

"On the back of the CPI release, expectations for the BoC first interest rate hike increased marginally, but still stand at just a 13% probability in the next year," Sutton added.

Despite today’s Chinese data easing concerns of a global slowdown the Eurozone threw a spanner in the works after data out of the region showed that manufacturing and service sector activity in the single currency bloc slowed this month.

Data firm Markit said its composite purchasing manager’s index for the euro zone fell to 52.8 from 53.5 in May. Activity in Germany's private sector slowed slightly, but the main source of weakness for the Eurozone was once again France.

Euro rate forecast - investors eye the ECB

The Euro was already under pressure from the decision by the European Central Bank to cut interest rates to a new record low and introduce a negative deposit rate for the regions banks. Economists are hoping that those measures could assist the Euro economy and will be looking for signs that they are doing so over the next few weeks.

Also offering support to the Canadian currency is the high price of crude oil, Canada’s biggest export. Although the value of the commodity softened today prices remain high. The high prices come as the situation in Iraq continues to deteriorate.

Despite the Iraqi government showing off its forces in parades last week the ISIS led Islamic militants continued to gain ground. The terrorists captured a number of towns as well as a strategic airport and border crossings.

With a lack of market moving domestic data due this week the ‘Loonie’ will be vulnerable to events in the US and elsewhere. A further escalation of the Iraq crisis could soften the currency if investors go on the search for safe haven assets.

Reference Canadian Dollar Exchange Rates - Updated 25/06/2014

The Pound Sterling to Canadian Dollar exchange rate is trading down -0.19% at 1.82099 GBP/CAD.
The Canadian Dollar to Australian Dollar exchange rate is trading down -0.18% at 0.99201 CAD/AUD.
The Canadian Dollar to Euro exchange rate is trading down -0.02% at 0.68390 CAD/EUR.
The Canadian Dollar to Pound Sterling exchange rate is trading up +0.19% at 0.54915 CAD/GBP.
The Canadian Dollar to US Dollar exchange rate is trading up +0.2% at 0.93255 CAD/USD.
The US Dollar to Canadian Dollar exchange rate is trading down -0.2% at 1.07233 USD/CAD.

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