September 15, 2021 - Written by John Cameron
STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Trends Down Slightly on CAD Upside
Pound Canadian Dollar Exchange Rate Edges Down on CAD Upside
The Pound (GBP) ticked down against the Canadian Dollar (CAD) this afternoon, following a morning of relatively level trading. Initially, upside in the Pound over record-high inflation data matched Canadian Dollar gains on rising oil prices.
The ‘Loonie’ then found further tailwinds this afternoon, trading up against the Pound as Canadian inflation printed above forecasts.
At the time of writing, GBP/CAD is trading at C$1.7499, slightly subdued from today’s opening levels.
Pound (GBP) Firms on Inflation Data
The Pound (GBP) gained against the majority of its peers this morning as UK inflation data for the month of August printed above forecasts, with annual inflation hitting its highest levels since March.
CPI also printed above forecasts at 3.1%- the highest figure since November 2011. The Office for National Statistics reports that a low base effect from last year had the biggest impact, with economists attributing about 0.9ppts of CPI inflation in August to the same cause.
The remainder of upward pressure came from rising prices in recreation and culture, transport, housing and utilities, food and restaurants and hotels. Without the government's Eat Out to Help Out scheme, diners are now paying closer to pre-pandemic prices for hospitality services, while fuel prices have also gone up as demand increases.
Some economists predict that inflation may reach 4.5% by November – a cause of concern for the Bank of England (BoE)’s monetary policy committee. Inflation is then expected to fall sharply next year, however, to below 2% by the end of 2022.
Canadian Dollar (CAD) Finds Support on Oil Prices, Inflation
The Canadian Dollar (CAD) started off the session well, bolstered by strong oil price dynamics. WTI crude extended its high run, marking a three-day price consolidation.
US Dollar (USD) downside also helped to support the ‘Loonie’, as a risk-on mood applied upside pressure, capping possible CAD downside as coronavirus cases peak in Alberta. Ontario also reported 593 new Covid cases amidst a rise in antivax sentiment.
Into the afternoon, the Canadian Dollar found fresh tailwinds as annual inflation increased to the highest inflation rate since March of 2003. CPI also printed marginally higher than expected, growing by 0.2%.
GBP/CAD Exchange Rate Forecast: Employment Data to Support Canadian Dollar?
Looking to tomorrow, Canadian employment data may boost the ‘Loonie’, if August’s employment change release reveals that 180K new jobs were created last month as expected. Oil prices will also likely determine CAD movement.
A lack of UK data is likely to limit Pound gains – although a risk-on mood may provide some support.
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TAGS: Pound Canadian Dollar Forecasts