Pound Canadian Dollar (GBP CAD) Soars as the Canadian Current Account Deficit Widens

August 30, 2017 - Written by Toni Johnson

STORY LINK Pound Canadian Dollar (GBP CAD) Soars as the Canadian Current Account Deficit Widens

The Pound rallied against the Canadian Dollar today on news that Canada’s current account deficit increased whilst mortgage approvals in the UK for July surged.

Imports exceeded exports, Statistics Canada reported, with the Canadian current account deficit demonstrated to have widened in Q2 of this year (though less than anticipated). The deficit printed at -C$16.3BN, short of the -C$17.4BN forecast but still significantly wider than the previous figure of -C$12.9BN.

This news follows Q1’s C$2.0BN deterioration in goods balance, and prompted GBP CAD to further solidify its gains.

UK Mortgage Approvals Hit 16-Month High, GBP Rallies

UK mortgage approvals were demonstrated to have hit a 16-month high in July at 68,689, smashing June’s 65,318 figure as well as the market forecast of 65,500.

The market reaction to this news was predominantly positive this morning, as despite the continued pressure of high inflation and low wage growth, UK consumers still seem to be seeking to purchase property (although many analysts are claiming that house prices will contract in the coming years).

Crude Oil Slumps, Canadian Dollar (CAD) Dragged Down

Crude oil prices slipped even further today as investors watched the continued fallout of tropical Storm Harvey, a storm that has flooded and thus severely crippled a significant amount of the region’s refining capacity.

Refineries have been shut down throughout the storm’s path due to the category 4 hurricane and the flooding that ensued, leading many to worry that the inventories will only rise whilst the refineries have no capacity for further oil intake (many suggest that they may be out of action for months).

Understandably this has crippled the price of crude oil (with the sector already struggling with a global oil glut) and, in turn, crippled the Canadian Dollar, as Canada is the world’s largest exporter of crude oil.

GBP CAD Forecast: Canadian GDP on the Horizon

Tomorrow will feature the release of Canada’s Q2 GDP figures, with the quarter-on-quarter growth rate estimated to fall from 0.9% in Q1 to 0.7% in Q2. The annualised figure, also, is expected to have fallen from 3.7% to 3.5% in Q2, a cause for concern for many investors who have sold the ‘Loonie’ in anticipation.

GBP CAD has, thus far, capitalised on this news, though its performance tomorrow could prove volatile, especially if the GfK consumer confidence figure for August disappoints.

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TAGS: Pound Canadian Dollar Forecasts