May 7, 2019 - Written by John Cameron
STORY LINK Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as US-China Tensions Spark Global Growth Concerns
Pound Canadian Dollar (GBP/CAD) Exchange Rate Flat as Oil Prices Slide
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of CA$1.7597.
The Canadian Ivey Purchasing Managers Index rose to a higher-than-forecast 55.9 in April compared to 54.3 in March.
This was the highest the index has been since December 2018.
However, this did little for the ‘Loonie’ as oil prices slipped as tension between the US and China sparked concerns over global growth.
Commenting on this, Head of Analytics at Interfax Energy, Abhishek Kumar said:
‘An escalation in the US-China trade war has brought oil prices under renewed pressure.
‘The spat has reinvigorated demand-side concerns, given that the conflict has been adversely impacting prospects for global economic growth.’
Risk-Sensitive Canadian Dollar (CAD) Muted despite Trump’s Tariff Threats
On Sunday, US President Donald Trump said that he would raise tariffs by 25% on $200 billion worth of Chinese goods by the end of the week.
He also stated that he would ‘shortly’ impose tariffs on $325 billion worth of imports that are currently free of duties.
US Trade Representative Robert Lighthizer has accused China of backtracking on commitments made during discussions.
Speaking to reporters, Lighthizer said:
‘Over the course of the last week or so we have seen an erosion in commitments by China. That in our view is unacceptable.
‘We’re not breaking off talks at this point. But for now […] come Friday there will be tariffs in place.’
This likely dampened sentiment in the risk-sensitive ‘Loonie’ as the Canadian currency weakened to a 10-day low against the US Dollar.
However, Lighthizer has insisted a deal on tariffs is still possible as Chinese Vice-Premier Liu He will still travel to Washington for further discussions this week.
Sterling (GBP) Flat as PM Pressured to Resign
On Tuesday, reports emerged that Prime Minister Theresa May is due to meet Chairman of the 1922 Committee.
It has been insisted by Downing Street that May’s meeting with Sir Graham Brady is routine.
However it has been suggested that following a request from the Committee, the Prime Minister will be pressed for a timetable outlining her resignation.
Meanwhile, further reports have suggested that May has also been warned that MPs will begin moves to remove her if she agrees to a Brexit deal with Labour.
This likely created a fresh wave of Brexit pessimism and uncertainty, dampening sentiment in Sterling.
Pound Canadian Dollar Outlook: Will the GBP/CAD Exchange Rate Rise on Better than Expected UK Retail Sales?
Looking ahead to Wednesday, the Pound (GBP) could rise against the Canadian Dollar (CAD) following the release of the UK like-for-like retail sales.
If retail sales edge up higher than forecast in April, Sterling could receive an upswing of support.
Later in the day, the ‘Loonie’ could claw back some losses following the release of the Canadian housing starts data.
If data reveals that the number of new single-family homes that were constructed rises higher than forecast, the Pound Canadian Dollar (GBP/CAD) exchange rate could fall.
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TAGS: Pound Canadian Dollar Forecasts