GBP & CAD Rates - Pound to Canadian Dollar Exchange Rate Edges Higher

September 29, 2014 - Written by James Fuller

STORY LINK GBP & CAD Rates - Pound to Canadian Dollar Exchange Rate Edges Higher

The Pound to Canadian Dollar exchange rate (GBP/CAD) was little changed as the week started as UK data prevented Sterling from making gains. Against the US Dollar, however the Canadian Dollar fell to its lowest level in six months as the ‘Greenback’ strengthened on expectations that the Federal Reserve will raise interest rates sooner than initially expected.

Sterling came under some pressure early in the session after a report showed that the number of mortgages approved by UK banks fell more than expected in August. According to the Bank of England, the number of mortgage approvals dipped from the 66,100 recorded in July to 64,212 in August. The figure was the weakest figure recorded since May and was below market expectations for 65,000.

Falling oil prices because of softer than hoped for economic data out of China was a big drag upon the commodity centric ‘Loonie’.

Against its US relation the ‘Loonie’ weakened to a fresh six-month low as the ‘Greenback’ continued to be bolstered by strong economic data releases and increased speculation that the US Federal Reserve will raise interest rates.

The US currency was continuing to find support from last Friday’s strong GDP growth figures that showed that the world’s largest economy expanded at its fastest pace in two years.

‘Where we’re at now, there’s not going to be a lot of resistance if we continue to get data out of the US that is of an interest rate environment that is likely to increase ahead of the Bank of Canada. It’s really going to be data

The Canadian currency is forecast to make further losses against its major peers over the course of the next few weeks due to a major energy deal. Encana Corp. is buying American resource giant Athlon Energy in a US$7.1 billion cash deal that will give the Canadian gas producer access to a major Texas oil play and speed up its shift towards more liquids production.

‘The deal could imply a large Canadian Dollar negative flow leading into mid December when the deal is expected to close,’ said Camilla Sutton, Chief FX Strategist at Scotiabank Global Banking and Markets.

The Canadian Dollar is likely to experience volatility against the Pound on Tuesday due to the release of the latest UK Growth Rate figures and Current Account data.

Canada will see the release of the latest PPI and monthly GDP figures, which if positive could offer some support to the currency.

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