Canadian Dollar: CAD Exchange Rate Firms vs Pound Euro

Modified: Wednesday, 5 November 2014 10:07 BST - Written by Tim Boyer

STORY LINK Canadian Dollar: CAD Exchange Rate Firms vs Pound Euro

The Pound to Canadian Dollar (GBP/CAD) exchange rate managed to hold onto previous gains as it found strength from the release of a better than forecast Manufacturing Purchasing Managers Index report earlier in the session.

Stronger than forecast Canadian manufacturing PMI data meant that further gains for the Pound were restrained.

According to the Royal Bank of Canada’s PMI report, manufacturing activity increased to its strongest level in nearly a year due to increased demand in new orders from overseas. The PMI increased by a seasonally adjusted figure of 55.3, the number was higher than the 53.5 recorded in September. The PMI figure was the biggest monthly increase seen since November 2013. Adding to the sense of optimism the forward-looking new orders index increased from 53.7 to 56.4.

In a PMI report, ay result below 50 indicates contraction whilst a number above indicates expansion.

‘We saw a strong uptick in Canada’s manufacturing business conditions in October driven by new order growth. Despite the challenges we are seeing in the European and emerging markets, the continued recovery of the US economy should continue to support Canadian exports going forward,’ said senior vice-president and chief economist at RBC Craig Wright.

Pound to Canadian Dollar Exchange Rate Forecast

The Pound is widely forecast to remain supported against the Canadian Dollar and other major peers until at least later in the week with Thursday’s Bank of England policy meeting. Separate PMI reports due on Tuesday and Wednesday was expected to show that activity in the UK construction and services sectors also improved markedly last month. The data could ease worries over a slowdown.

Analysts are expecting BoE policy makers to vote in favour of leaving interest rates unchanged at the record low level of 0.5% and to maintain the monthly quantitative easing programme unchanged at £375 billion.


The Canadian Dollar is forecast to see further movement on Tuesday. If the latest Canadian Balance of Trade report shows a narrowing in the nation’s trade deficit. Economists are expecting the deficit to narrow from $0.61 billion to $0.3 billion.

Weighing on the currency are forecasts that Canadian commodity exports of precious metals could continue to decline in value. With weakening crude oil prices, already weighing heavily upon the Canadian Dollar.

A strengthening US Dollar is also likely to put pressure on the Canadian Dollar but in the end, it could offer support if the improving US economy supports increased Canadian exports.

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TAGS: Canadian Dollar Forecasts Currency Predictions Pound Canad Forecasts