GBP/CAD Slides after Disappointing UK Labour Data

December 14, 2016 - Written by Ben Hughes

STORY LINK GBP/CAD Slides after Disappointing UK Labour Data

The Pound to Canadian Dollar exchange rate fluctuated in a wider region on Thursday afternoon, as the day’s Bank of England (BoE) meeting disappointed investors and left the Pound increasingly volatile.

The bank’s policymakers indicated that higher inflation in 2017 would not be enough to pressure the bank into tightening monetary policy. Despite this, the ‘Loonie’ struggled to sustain many gains due to the risk-off movement since Wednesday’s Fed meeting.

[Previously updated 15/12/2016]

The US Federal Reserve may have hiked interest rates, but this has not allowed the GBP/CAD exchange rate to advance into positive territory today.

Investors are waiting for the Bank of Canada’s (BOC) latest Financial System Review before adjusting their positions.

[Previously updated 14/12/2016]

GBP/CAD Exchange Rates Weaken after UK Labour Market Weakens

The UK labour market looks set to ease back from its record highs after losing -6,000 jobs over the three months to October.

Wage growth strengthened above-forecast and unemployment remained at an 11-year low, but analysts warned that the backwards movement - which came in spite of forecasts for job creation of 50,000 - could be a sign that the labour market is finally showing the shock of the vote for Brexit.

British Chambers of Commerce (BCC) Head of Economics Suren Thiru, said;

‘It is likely that UK unemployment will start to drift upwards in the coming months, as uncertainty over Brexit and the increasing input costs faced by businesses weigh on jobs growth. However, while we currently forecast the unemployment rate will peak at 5.5% in early 2018, this is still well below the long-term average.’

Trump Secretary of State Pick Boosts CAD Exchange Rates on Improved Oil Outlook

The Canadian Dollar to Pound Sterling exchange rate is edging higher today, despite the fact that oil markets continue to weaken from their recent highs.

Brent Crude is currently trading down -1.2% at around US$55 per barrel, while WTI Crude has fallen -1.3% to the region of US$52.3 per barrel.

However, the outlook for Canadian oil has improved again in recent days thanks to news that Donald Trump has chosen CEO of Exxon Rex Tillerson as Secretary of State.

Tillerson will be the person with the power to approve the controversial Keystone XL pipeline from Canada to the US, which has long been stalled thanks to environmental concerns.

Speaking at an Economic Club of Washington event in 2015, Tillerson claimed;

‘The United States and Canada both need this vital pipeline. Keystone XL would improve U.S. competitiveness, it would increase North American energy security and it would strengthen the relationship with one of our most important allies and most valued trading partners.’

The prospect of improved Canada/US oil infrastructure has therefore given CAD exchange rates a boost.

GBP/CAD Exchange Rate Forecast; Will Federal Reserve Rate Hike Damage Canadian Dollar?

Today’s market movement has been distorted by the gravity of the upcoming US Federal Reserve policy announcement.

A 0.25% is almost guaranteed as far as the markets are concerned; this could strengthen the US Dollar further which would weaken the outlook for Canadian exporters and lower oil prices, pushing CAD lower.

Tomorrow, the Bank of England (BoE) is unlikely to change monetary policy, but could upgrade its outlook on borrowing costs in response to recent above-forecast inflation data.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Daily Currency Updates Poun Forecasts