British Pound to US Dollar, Canadian Dollar Forecasts GBP/CAD, GBP/USD Rates Higher despite Slowing UK Manufacturing Output
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Tick Higher after US Manufacturing Unexpectedly Contracts
The Pound Sterling to US Dollar (GBP/USD) exchange rate edged fractionally higher by around 0.1% on Tuesday afternoon.
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In the early stages of Tuesday’s European session the British asset advanced versus its currency rivals following results from the Bank of England (BoE) stress tests. Designed to evaluate how the seven major British institutions would cope with another recession, the outcome for the BoE’s tests showed all banks were in a position to withstand recession should it reoccur. However, the Sterling uptrend was halted by the UK’s Manufacturing PMI for November which showed output was slower-than-anticipated. The data wasn’t enough to provoke a significant Sterling downtrend, however, given that manufacturing output remained in growth territory.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5070.
The US Dollar, meanwhile, depreciated versus the majority of its currency rivals after weak Chinese manufacturing output softened prospects of a Federal Reserve cash rate increase in December. Adding fuel to the fire was the US ISM Manufacturing Report which failed to meet with the median market forecast rise from 50.1 to 50.5, with the actual result dropping to 48.6. This was particularly disappointing given that November’s result dropped below the 50 mark which separates growth from contraction. The combination of today’s weak data and concerns over China may have a damaging impact on policymaker confidence.
Pound Sterling to Canadian Dollar (GBP/CAD) Conversion Rate Predicted to Trend Higher after Canadian GDP Unexpectedly Stagnated
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate edged higher by around 0.2% on Tuesday afternoon.
In response to the British Manufacturing PMI, Rob Dobson, Senior Economist at Markit stated: ‘While the improvement in recent months is a welcome trend, scratching beneath the surface of the manufacturing numbers stills exposes a number of weaknesses. Growth remains heavily focussed on the domestic consumer, while the strong gains at large-scale producers have yet to filter through to SMEs. A broadening of the expansion is necessary if the nascent recovery is to be sustained. On the price front, deflationary pressures are still prevalent at manufacturers as input costs fell at one of the sharpest rates in survey history and output selling prices fell further. If this mix of subdued growth and weak price pressures is reflected in other sections of the economy, the Bank of England will have further cause to push any potential rate increase into the spring of 2016.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 2.0132.
The combination of falling crude oil prices and disappointing domestic data caused the Canadian Dollar to decline versus most of its currency rivals on Tuesday afternoon. Of particular disappointment to those invested in the ‘Loonie’ (CAD) was September’s annual Gross Domestic Product which failed to meet with expectations of 0.4% growth, with the actual result stagnating at 0.0%. This disappointing data and resiliently low oil prices has caused many traders to speculate that the Bank of Canada (BOC) may surprise markets with a benchmark interest rate cut tomorrow.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Hold Gains ahead of UK Construction PMI
Given the absence of further domestic data to provoke volatility today, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to hold gains for the remainder of Tuesday’s trade. With that being said, however, there is potential for changes in response to oil prices should any dramatic swings occur.
Wednesday will be significant for those trading the GBP/CAD pairing. UK Construction PMI data is likely to provoke Sterling changes. Pundits will be hoping for a positive result to somewhat micrify the slower pace of manufacturing output recorded in November. However, the GBP/CAD conversion rate is far more likely to see volatility in response to the Bank of Canada interest rate decision, which is predicted to see borrowing costs remain on hold at 0.50%.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5048 to 1.5126.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 2.0053 to 2.0183 during Tuesday’s European session.