Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Slips despite UK Employment at Highest Since 1971

March 19, 2019 - Written by John Cameron

STORY LINK Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Slips despite UK Employment at Highest Since 1971

Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Dips despite UK Unemployment Hitting 44-Year Low

The Pound Canadian Dollar (GBP/CAD) exchange rate slipped over the course of the morning, and is currently trading at an inter-bank rate of CA$1.7577.

Data released this morning revealed that UK employment is at its highest since 1971, as a record high of 32.7 million people are currently in employment.

The related unemployment figure dipped from 4% to 3.9%, the lowest level since January 1975, hitting a new 44-year low.

This suggests that the labour market remains unaffected by Brexit anxieties.

Data also showed that wages in the UK continued to grow, as basic pay rose by 3.4% at an annualised rate in the three months leading up to January.

Commenting on this, Alastair Neame, Senior Economist at the CEBR think tank said:

‘The long running squeeze on available labour supply is placing upward pressure on wage growth.

‘Including bonuses, average weekly earnings for employees in Great Britain were estimated to have increased by 3.4%, before adjusting for inflation, and by 1.5%, after adjusting for inflation, compared with a year earlier.’

Sterling (GBP) Limited as Bercow Rules out Third ‘Meaningful Vote’

Brexit anxieties likely weighed on the Pound Canadian Dollar (GBP/CAD) exchange rate following an announcement from the UK House of Commons Speaker, John Bercow.

Surprisingly, Bercow ruled out a third ‘meaningful vote’ unless the Prime Minister made substantial changes to her Brexit withdrawal agreement.

The Speaker cited a rule dating back to 1604 which states that a defeated motion could not be brought back in its same form during the course of a parliamentary session.

However, reports have suggested the government will try to get Theresa May’s deal through parliament despite Bercow’s ruling.

Brexit Secretary, Stephen Barclay suggested a vote could take place next week after the Prime Minister has sought an Article 50 Extension from the European Union.

Canadian Dollar (CAD) Rises on Increased Oil Prices

The Canadian Dollar (CAD) likely rose against the Pound (GBP) as oil prices continued to lift.

Oil prices rose after OPEC announced they were cancelling their meeting scheduled for April.

Prices were influenced by the ongoing Iran and Venezuela sanctions and by further hope the US and China will be able to reach a trade agreement.

Pound Canadian Dollar Outlook: Will the GBP/CAD Exchange Rate Rise on Better-than-Forecast Retail Prices?

Looking ahead to tomorrow, the Pound (GBP) could rise against the ‘Loonie’ (CAD) following the release of the UK Retail Price Index (RPI).

If retail prices rebound slightly, rising by 0.7% in February, it could offset January’s contraction of -0.9% and buoy Sterling.

The release of the UK Consumer Price Index (CPI) could also cause movement in the pairing.

If the CPI rises by 1.8% as forecast or slips below this, it could weigh on Sterling as inflation fails to meet the Bank of England’s (BoE) inflation target of 2%.

At the end of this week’s session the Canadian Dollar could rise if retail sales rebound in January from the previous -0.1%.

Also likely to cause movement in the pairing is the release of February’s Bank of Canada (BoC) Core Consumer Price Index (CPI).

If the core CPI shows 1.2% growth or above compared to the previous year’s growth of 1.5%, it could cause the Pound Canadian Dollar (GBP/CAD) exchange rate to rise.

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TAGS: Pound Canadian Dollar Forecasts