Pound to Canadian Dollar - GBP/CAD Falls by More than 1% on Exchange Rate Markets

Modified: Monday, 2 February 2015 23:17 BST - Written by James Fuller

STORY LINK Pound to Canadian Dollar - GBP/CAD Falls by More than 1% on Exchange Rate Markets

The Pound Sterling weakened by more than 1% against the Canadian Dollar exchange rate as oil prices increased for a second consecutive day and as traders widely ignored a softer than forecast Manufacturing PMI report from the North American nation.

The ‘Loonie’ advanced even as the latest Royal Bank of Canada compiled Manufacturing Purchasing Managers Index (PMI) came in at its weakest level in close to two years. The PMI came in at 51.0 in January, which was a decline from December’s level of 53.9. The index suggests that the rate of expansion in the manufacturing sector seeing output and new business grow at a slower pace. The report also showed that employment in the sector fell for the first time since the start of 2014.

‘The latest data indicates that Canada’s manufacturers started the year with concerns around uncertainty about global growth prospects, financial market volatility and a sharp drop in oil prices. As we look ahead, we expect an eventual recovery in oil prices alongside the strong US economy and a more competitive currency. These factors will support economic growth similar to the 2 ½ % rate achieved last year and the manufacturing sector offsetting weakness in the energy sector,’ said Craig Wright, senior vice president and chief economist at Royal Bank of Canada.

The markets shrugged off the poor data and the Canadian Dollar advanced as crude oil extended a rally from its lowest level in six years. The cause for the rise in the commodity’s price is a result of speculation that supply will fall due to a strike in the US oil industry and as a report released in the USA showed that demand for leasing oilrigs is slowing. The data suggests that producers may be getting closer to cut output, something that would push prices higher and ease the global supply glut.

‘Most market observers have been surprised by the scale of the decrease, and expectations of US oil output this year will no doubt be lowered accordingly. The foundation for a steady price recovery in the second half of the year has thus been laid,’ said analysts from Commerzbank.

GBP/CAD Exchange Rate Forecast

The Canadian Dollar could make more gains against the Pound as the week progresses as the markets await the outcome of the Bank of England’s latest interest rate decision. The bank’s policy makers are not expected to raise rates until 2016 due to the sharp fall in inflation.

Canadian Dollar Exchange Rates Today

The Canadian Dollar to Australian Dollar exchange rate converts +0.69 per cent higher at 1 CAD is 1.01984 AUD.
The Canadian Dollar to Swiss Franc conversion rate is +1.6 pct higher at 0.73766 CAD/CHF.
The Canadian Dollar to Euro exchange rate today is converting +0.65 per cent higher at 0.70144 CAD/EUR.
The Canadian Dollar to Pound Sterling exchange rate is +1.3 pct higher with a conversion rate of 1 CAD equals 0.52920 GBP.
The Canadian Dollar to New Zealand Dollar exchange rate is +0.43 pct higher with a conversion rate of 1 CAD equals 1.08953 NZD.
The Canadian Dollar to US Dollar conversion rate is +0.97 pct higher at 0.79568 CAD/USD.

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