CAD/GBP and CAD/USD Exchange Rates Volatile to Geo-Political Escalations
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This session has seen the ‘Loonie’ reach highs of 0.5438 versus lows of 0.5430.
The Canadian Dollar as a commodity currency is facing severe volatility due to geopolitical tensions and escalations surrounding Russia and Ukraine which has, by proxy, caused crude oil prices to drop.
Scotiabank representative Camilla Sutton stated: ‘Since its July 3rd high, [the Canadian Dollar] has lost three percent, highlighting the vulnerability around the currency. The core risk for [the Canadian Dollar] this week is Friday’s employment release.’
Thursday will see the publication of the Canadian Purchasing Managers Index (PMI) which is forecast to reach the 50.0 threshold which indicates expansion in July; a more favourable result than June’s 46.9 denoting contraction.
The Unemployment Rate figures are expected to remain stagnant at 7.1% on Friday, whilst the Net Change in Employment statistic is forecast to show a rise of 24.0K employment positions filled in July.
Conversely, the Pound is anticipating fluctuation on Thursday with the announcement of the Bank of England (BoE) Interest Rate decision.
The prospect of rate hikes are eagerly anticipated, which would show the UK to be the first among the G7—the seven most developed and affluent nations—to raise interest rates since the great financial crisis of 2007/2008.
In anticipation of the meeting the Pound is inevitably trading weakly, close to its lowest level against the ‘Buck’ in eight weeks.
Expert in the field Lee Hardman suggested: ‘The next couple of weeks are going to be key for Pound direction in the near term. Market reaction will all come in the following week when we get the release of the Inflation Report and then the minutes in the week after.’
However, some economists are speculating that the Bank of England could see a split in the policymakers regarding the decision which has formerly reached a unanimous vote.
Economist Daniel Vernazza suggested: ‘All the attention will be on whether or not there is a split vote. Our expectation is that one or two members will vote for a hike, with a sizable risk that no one does.’
The Canadian Dollar to Pound exchange rate will face fluctuations in the latter half of this week following the BoE interest rate meeting and Canadian unemployment figures. However, as geopolitical tensions also escalate the currency pairing could be subject to severe volatility. If the BoE meeting shows a division in board members views, the Pound could rally.
The GBP to CAD exchange rate is presently reaching 1.8403.