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GBP to Canadian Dollar Exchange Rate Steadies on Gloomy Canadian Economic Forecast

March 21, 2019 - Written by John Cameron

GBP to Canadian Dollar Exchange Rate Steadies on Gloomy Canadian Economic Forecast

The Pound Canadian Dollar (GBP/CAD) exchange rate is flat today and is currently trading around CA$1.7529 on the inter-bank market.

The Canadian Dollar (CAD) is rangebound against the Pound (GBP) today despite the publication of the Canadian ADP employment change figures for February which improved at 36.2K against January’s 35.4K.

Today also saw the release of the Canadian wholesale sales figures for January which increased above expectation to 0.6%.

The ‘Loonie’, however, has been under increasing pressure following The Conference Board of Canada’s (CBOC) dovish forecast of the Canadian economy growing by just 1.4% this year.

Matthew Stewart, the Director of Economics at CBOC, remained optimistic, however, saying:

‘The weak growth that was evident at the end of 2018 is expected to persist into the first half of 2019. Despite this weak growth, there are reasons to be cautiously optimistic. Job gains and wage growth were strong at the beginning of the year. In addition, the anticipated impact on investment from the measures contained in the federal government's fall economic statement have yet to materialize.’

Sterling, meanwhile, has struggled today following Prime Minister Theresa May’s televised statement yesterday in which she said that the UK would only delay Brexit until 30 June, and this would be conditional one whether MPs would support her deal in Parliament next week.

With Brexit now hinging upon a single vote next week – and following a series of previous rejections by MPs – this has caused many Pound investors to remain fearful of a possible no-deal Brexit.

GBP/CAD Exchange Rate Rangebound as Brexit Developments Unfold

The Pound failed to benefit from the publication of the UK retail sales figures for February today which came in at a better-than-expected 0.4% against the forecast decrease of -0.4%.

Today also saw the Bank of England announce its interest rate decision, which held steady at 0.75%.

However, with Brexit news dominating the headlines today, the BoE’s comments were cautious, indicating that businesses were being affected by the uncertainty surrounding the UK’s future in the EU.

The BoE said in its statement:

‘The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal, in particular: the new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond.’

GBP/CAD Forecast: Pound Could Rise if May’s Deal Gains Traction

Canadian Dollar traders will be looking ahead to the publication of the Canadian retail sales figures for January tomorrow, which are expected to improve at 0.4%.

These will be followed by the Bank of Canada’s release of the core CPI figures for February which, however, are expected to decrease against January’s figures.

The GBP/CAD exchange rate will remain sensitive to Brexit developments over the coming weeks, and with any signs of a no-deal Brexit being discouraged by MPs by backing Theresa May’s withdrawal deal, this would prove Pound-positive.

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