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Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Falls as Canadian Inflation Edges Up

April 17, 2019 - Written by John Cameron

Pound Canadian Dollar (GBP/CAD) Exchange Rate Slides as Canadian CPI Rises

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate slipped and the pairing is currently trading at an inter-bank rate of CA$1.7349.

Canadian annual inflation rose to 1.9% as forecast in March as rising rent and mortgage interest costs boosted headline inflation.

This likely buoyed the Canadian Dollar on Wednesday afternoon.

However, this left inflation below the Bank of Canada’s (BoE) 2% target for the third month in a row.

Meanwhile, the BoC’s core Consumer Price Index (CPI) rose by a higher-than-forecast annual rate of 1.6%, providing further support for the 'Loonie'.

Sterling (GBP) Falls as UK House Prices Slow to a Six-and-a-half-Year Low

UK inflation was stable at 1.9% in March, just below the Bank of England’s (BoE) 2% target, as falls in food prices were offset by a rise in fuel prices.

The UK’s modest inflation rate is helping the BoE hold off on fresh interest rate hikes while waiting for the Brexit uncertainty to clear.

However, the Office for National Statistics (ONS) revealed that UK house prices rose at the slowest rate since September 2012 in February.

Commenting on this, Head of Inflation at the ONS, Mark Hardie said:

‘Annual house price growth has slowed to the lowest rate in close to seven years.

‘Growth in Wales and the west of England was offset by a sustained fall in London and falling prices in the South East for the first time since 2011.’

Increase in Risk Appetite Boosts Canadian Dollar (CAD)

The Canadian Dollar (CAD) rose against the Pound (GBP) as data revealed that the Chinese economy appears to be rebounding.

The Chinese economy grew by a higher-than-forecast 6.4% in the first quarter of 2019, suggesting that the government’s attempts to stimulate activity levels is proving to be successful.

Annual industrial output rose by 8.5%, the highest in nearly five years.

China’s economic growth led to some investors believing the worst is over for the global economy, boosting risk-appetite.

Canadian Dollar (CAD) Rises despite Drop in Manufacturing Shipments

On Tuesday data revealed that manufacturing shipments in Canada fell by -0.2% in February, and January’s figure was revised down to 0.8%.

Statistics Canada said that sales were down in 15 out of the 21 industries which represents around 65.9% of the country’s manufacturing sector.

However, this could not stop the ‘Loonie’ from rising against Sterling.

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

Looking ahead to tomorrow’s session, the Pound (GBP) could rise against the Canadian Dollar (CAD) following the release of the UK retail sale figures.

If sales rise higher than forecast in March, Sterling could receive an upswing of support.

On Thursday afternoon the Canadian retail sales figures are due for release, which could cause the ‘Loonie’ to fall.

If retail sales contract once again in February, the Pound Canadian Dollar (GBP/CAD) exchange rate could rise.

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