GBP CAD Exchange Rate Stabilises as UK Retail Sales Plummet

Modified: Friday, 20 January 2017 15:05 BST - Written by James Fuller

STORY LINK GBP CAD Exchange Rate Stabilises as UK Retail Sales Plummet

The GBP CAD exchange rate stabilised this morning following its recent rally as disappointing UK sales figures ended the Pound’s advance.

Pound Canadian Dollar (GBP CAD) Gains Muted by Drop in Retail Sales

The Pound Canadian Dollar (GBP CAD) exchange rate struggled to extend its gains this morning as the Office for National Statistics (ONS) reported that Retail Sales fell unexpectedly at the end of 2016.

Sales fell from 5.7% to 4.3% in December, disappointing traders who had predicted that sales would rise to 7.2% over the holiday period and fell at its fastest pace since April 2012.

This was particularly disconcerting for investors as the resilience of consumer spending was seen as a major contributing factor behind the growth in the UK economy since June’s vote to leave the EU.

Also worrying traders is the forecast that spending is set drop even further in 2017 as shoppers feel the pinch of the Pound’s devaluation, with inflation expected to outpace wage growth. Meanwhile retailers face the prospect of having to increase their prices as they renegotiate with their suppliers for the first time since the plunge in Sterling.

Disappointing Inflation Figures Weighs on Canadian Dollar

The Canadian Dollar was pressured this afternoon by the release of Canada’s latest Consumer Price Index.


The Index showed that the domestic inflation rate rose from 1.2% to 1.5% in December, however this was lower than the 1.7% that had been forecast.

This was compounded by the release of Canada’s own retail sales figures as it showed a disappointing fall from 4% to 3% over the same period.

GBP CAD Exchange Rate Forecast: UK Supreme Court Judgement Ahead

The GBP CAD exchange rate may rise on Tuesday as the UK’s Supreme Court finally delivers it judgement on whether the British government should be allowed to invoke Article 50 without a vote in parliament.

The Pound is expected to rise should the Court rule against the government as trader believe it will give opposition MPs a chance to oppose a 'hard Brexit', although following the announcement that MP’s and Peers would be able to vote on the final terms of the government’s 'Brexit' plans is impact its likely to be lessened.

Meanwhile the Canadian Dollar’s position next week is even more uncertain as a lull in domestic data is likely to intensify the impact of Donald Trump’s first week in office. Investors will be hoping that the new president will clarity some of his economic plans, particularly in regards to the North American Free Trade Agreement (NAFTA) as although Trump has been very vocal in his opposition to trade with Mexico he has been largely silent regarding Canada.

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TAGS: Canadian Dollar Forecasts Currency Predictions