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Pound Sterling Strengthens Against Canadian Dollar Exchange Rate

March 9, 2015 - Written by Tim Boyer

The Pound Sterling made gains against the Canadian Dollar due to the release of disappointing Canadian housing starts data and another dip in crude oil prices. The UK currency found support early in the session from a report, which showed that businesses in the nation saw their overall costs fall in February for the first time in six years. The report is good news for the nation’s manufacturers as it means that companies will have more spare cash to invest in growth and hiring more staff. The drop in oil prices over the past few months was the main contributor to the fall costs as it led to cheaper energy prices. Another report meanwhile showed that Britons managed to save more money than at any time over the last ten years. According to National Savings and Investments, the average Brit is managing to save around £113 each month. The amount reflects the amount of cash people are putting into their bank accounts and ISAs.

As the session progressed the Canadian Dollar weakened as data released by the Canadian Mortgage and Housing Corp showed that Canadian housing starts fell sharply last month as severe winter weather delayed construction and influenced upon the housing market. The report showed that the annualised rate of housing starts fell to 156,276 last month from a downwardly revised number of 187,025 in January. The number fell well short of the 180,000 economists had been forecasting.

‘The winter’s chill casts doubt on how much we should read into the dive in Canadian housing starts in February. The 156.3k level, down from 187k in January was well below the recent trend in permits (and unused permits) would have suggested. February is not in raw, unadjusted terms an important month for home building, which is a further reason to downplay this particular month’s figures,’ said CIBC economist Avery Shenfeld .

February’s drop in permits included a significant drop in multiple urban starts, which fell to 86,214 units in February from 115,123 in January. This category includes the closely watched condominium sector.
Traders of the Canadian Dollar will now be looking ahead to the end of the week due to the release of February’s Canadian employment data. Economists are forecasting that the nation’s overall unemployment rate will remain steady at 6.6%. A weaker than forecast figure will put more pressure on the currency. The Pound meanwhile is forecast to trade in a narrow range due to a lack of market moving data from the UK.

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