Pound Sterling to 'Loonie' (GBP/CAD) Exchange Rate to Hit 1.95 on Damp Market Sentiment, 3-Week Low Crude Prices

June 29, 2015 - Written by John Cameron

STORY LINK Pound Sterling to 'Loonie' (GBP/CAD) Exchange Rate to Hit 1.95 on Damp Market Sentiment, 3-Week Low Crude Prices

Canadian GDP to Cause CAD to USD, GBP Exchange Rate Movement Today

The Canadian Dollar to Pound Sterling and Canadian Dollar to US Dollar exchange rates could fluctuate later today as Canada publishes its latest growth figures. If the annual GDP number ticks higher, as economists expect to be the case, the CAD/GBP, CAD/USD figures may climb. However, a disappointing result would be 'Loonie' negative.

Earlier...

CAD Exchange Rate Lower against EUR, GBP, USD Today, Oil Prices Fall

The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced by around 0.66% on Monday afternoon.

After British economic data produced mixed results which erred towards negativity, the Pound slumped versus many of its peers. Sterling also lost ground thanks to a spate of trader profit-taking after last week surge opened up some attractive selling opportunities. The British asset is holding gains over most risk-correlated currencies, however, with the Greek situation causing risk-averse trading.

The Canadian Dollar, meanwhile, softened versus many of its rivals in response to cooling trader risk appetite. In addition, fears regarding the Greek situation also weighed on crude prices which have tumbled to below $60 a barrel, which in turn hurt demand for the oil-correlated ‘Loonie’ (CAD).

The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9513.

Pound Sterling (GBP) Exchange Rate Forecast to Edge Higher against the ‘Loonie’ (CAD) after UK Mortgage Approvals Miss Estimates

Having surged significantly last week, thanks to a succession of positive ecostats and rate hike speculation, the Pound softened on Monday. This is due to the fact that the appreciation led to tempting selling opportunities as traders’ bought-profits. With that in mind, the Pound is likely to resume appreciation as the week progresses with traders readjusting positions to justified levels.

In addition to trader profit-locking, the Pound softened in response to mixed results from domestic data publications. Of particular disappointment was Mortgage Approvals which came in at 64,400 in May; missing the market consensus of 68,800 new approvals. Many analysts don’t expect this to be a long-term slowdown given May’s data was marred by political uncertainty with the general election yet to be concluded.

‘We expect support for housing market activity to come from current very low (in some cases record low) mortgage rates, strengthening earnings growth, rising employment and elevated consumer confidence,’ said Howard Archer, economist at IHS Global Insight.

The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate dropped to a low of 1.9323.

Canadian Dollar (CAD) Exchange Rate Forecast to Decline against the British Pound as Oil Prices Tank

As explained above, demand for safe-haven assets has had a marked effect on risk-correlated assets, and the ‘Loonie’ is no exception. However, the depreciation has been slowed somewhat thanks to US Dollar strength. If the ‘Greenback’ (USD) continues to climb as a result of safe-haven demand, the chances of a Federal Reserve rate hike this year are greatly reduced. This means that the divergence between the neighbouring currencies is narrowed for an extended period.

Also weighing heavily on demand for the Canadian Dollar is falling crude oil prices as geopolitics in Greece weighs on risk sentiment. Most analysts are predicting further weakness as we enter a period of uncertainty ahead of the Greek referendum.

‘This may be the time when we break lower and into the $50s for Brent as we have a full week of uncertainty,’ said Bjarne Schieldrop, head of commodity analysis at SEB in Oslo.

Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Gains ahead of British Consumer Confidence

Given the absence of further domestic data publications to provoke volatility, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold gains for the remainder of Monday’s European session. Tuesday ought to see heightened GBP/CAD volatility, however, with British Consumer Confidence data due for release. The final figure for the UK’s first-quarter Gross Domestic Product will also be of interest for those trading with the British Pound. European data would ordinarily be very impactful on common currency movement, but German labour market data and Eurozone Inflation data may be overshadowed by ongoing geopolitical unrest in the Hellenic nation.

The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate climbed to a high of 1.9525 today.

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