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GBP/CAD Forecast: Pound to Canadian Dollar Exchange Rate Struggling for Direction

September 1, 2021 - Written by John Cameron

The Pound to Canadian Dollar exchange rate (GBP/CAD) is struggling for direction this morning despite a better-than-expected manufacturing PMI reading from the UK.

The GBP/CAD pairing are currently trending at around CA$1.7322 as Canadian Dollar investors remain upbeat about Canada’s economic growth and recovery.

Pound Sterling (GBP) Exchange Rate Eyes UK Manufacturing PMI

Sterling has found support in PMI data from the UK for August which has shown that the IHS Markit Manufacturing PMI softened less than expected to 60.3 in August, from 60.4 in July.

However, supply-chain issues and shortages are currently limiting growth in the manufacturing sector.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply commented on the latest PMI reading, saying:

‘August’s results were almost a carbon copy of the previous month where recovery for manufacturers continued, but there were signs of stagnation and the rise in overall activity slipped back to the weakest for half a year. Businesses were thwarted by brittle supply chains struggling with shortages, port and transportation difficulties as delivery times stretched not to days or weeks, but months for some goods.’

‘New orders continued to flow in for the seventh month in a row, but a mismatch between supply and demand is affecting the UK economy.’

Rob Dobson, Director at IHS Markit, also commented on the data, saying:

‘Severe disruptions to supply chains and raw material shortages eroded the growth momentum of UK manufacturing in August.’
‘Although solid gains in output and new orders were achieved, companies reported that production, delivery and distribution schedules were experiencing substantial delays.’

Canadian Dollar (CAD) Exchange Rate Supported by Rising Oil Prices

The Canadian Dollar has remained appealing across the board this morning following on from yesterday afternoon GDP figures from Canada.

Data showed that the Canadian economy expanded 0.7% during the month of June, data which bolstered the appeal of the ‘Loonie’.

Further support for the commodity-correlated currency has been found from an ongoing rally in oil prices.

The Canadian Dollar could find further support this afternoon if the Canadian manufacturing PMI continues to push higher.

GBP/CAD Exchange Rate Forecast: UK Services PMI in Focus

Pound investors will be keeping an eye of the UK services PMI on Friday, if the PMI beats forecasts then Sterling could head higher into the weekend.

Canadian Dollar traders will keep an eye of the global market mood in the coming days, alongside any further rises in oil prices which could see the ‘Loonie’ head higher.

The GBP/CAD pairing will continue to be driven by any further coronavirus developments in the coming days.

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