Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Slips on Lower-than-Forecast UK Inflation

May 22, 2019 - Written by John Cameron

STORY LINK Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Slips on Lower-than-Forecast UK Inflation

Pound Canadian Dollar (GBP/CAD) Exchange Rate Falls as Energy Costs Drive-up UK Inflation

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate slipped and the pairing is currently trading at an inter-bank rate of CA$1.6955.

On Wednesday data revealed that UK inflation rose by less than markets expected.

However, the UK Consumer Price Index (CPI) hit the highest level this year, rising by an annual rate of 2.1% in April.

This followed a 1.9% rise in March, and surpassed the Bank of England’s (BoE) 2% inflation target.

The Office for National Statistics (ONS) showed that rising electricity and gas prices were the largest driver of inflation.

However, the rise in inflation now means that real wage growth in the UK has slowed to 1.2%.

Pound (GBP) Battered by Brexit Uncertainty

The Pound was battered by Brexit uncertainty on Wednesday ahead of the Prime Minister making a case for her new Brexit deal.

The Withdrawal Agreement is due to be published later today.

Michael Gove, Environment Secretary has defended the plan, urging MPs to ‘take a little bit of time and step back’ to ‘reflect’ on the bill.

Meanwhile, some reports have suggested that some senior Tories have upped their efforts to remove the Prime Minister from her position.

However, the Conservative 1922 Committee has previously refused to change the rules regarding a motion of no-confidence.

Canadian Dollar (CAD) Rises as China ‘Open’ to Resume Trade Talks

China has called upon the US to resume trade talks as the tensions between the two countries dampens risk-appetite amongst traders.

When speaking to Fox News Chinese Ambassador to the US, Cui Tiankai stated:

‘China remains ready to continue our talks with our American colleagues to reach a conclusion. Our door is still open.’

However, Cui Tiankai blamed Washington, saying that it was the US that changed its mind on trade agreements.

Added to this, the US is now considering slapping sanctions on Chinese video surveillance firm, Hikvision.

These sanctions would be similar to the ones imposed on telecoms giant, Huawei last week.

This would likely deepen trade tensions between Washington and Beijing and dampen sentiment in the risk-sensitive Canadian Dollar.

Pound Canadian Dollar Outlook: Will a Jump in Canadian Retail Sales Buoy CAD?

Looking ahead to this afternoon, the Canadian Dollar (CAD) could rise against the Pound (GBP) following the release of the Canadian retail sales.

If March’s retail sales rise higher-than-forecast to reach a 10-month high, the ‘Loonie’ could rise.

Meanwhile, on Thursday the Canadian Dollar could rise further following Statistics Canada’s release of March’s wholesale sales.

If sales jump higher than forecast, it could buoy the ‘Loonie’ and cause the Pound Canadian Dollar (GBP/CAD) exchange rate to slide.

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TAGS: Pound Canadian Dollar Forecasts