Canadian Dollar to British Pound (CAD/GBP) Exchange Rate Awaits Friday’s CPI Data
The Canadian Dollar (CAD) is presently trading up against the British Pound (GBP) at 0.5437, with daily highs of 5.446 and falling to lows of 0.5426.
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Conversely the ‘Loonie’ is also trading up against the US Dollar (USD) attaining up to 0.9326 at its highest point, and 0.9304 at its lowest so far this session.
The Canadian Dollar has softened this week when the Governor for the Bank of Canada, Steven Poloz, stated that interest rates would remain in line with the past four years, continuing to reside at 1.0%.
Poloz stated: ‘We are still a long way from home. Our economy has room to grow. And when we do get home, there is a growing consensus that interest rates will still be lower than we were accustomed to in the past.’
Initially this decision caused the ‘Loonie’ to dip, however after the full report was released the Loonie reached its 93 cents region again against the US Dollar.
However the Bank of Canada seems to have adopted a slightly more pessimistic stance after reducing GDP projections down a fraction for 2014 and 2015, claiming that they believe the economy will be functioning at full capacity in approximately June 2016.
Economist for Capital Economics, David Madani, contested this viewpoint however: ‘We think it will take much longer than 2016. Overall, the bank’s latest policy statement supports our views that interest rates will have to remain low for longer than the consensus view.’
However Canada has seen some comfort this week as the housing market seems to be stabilizing, which has been a concern amongst economists in recent times.
Conversely the Pound has seen positive gains this week after UK employment rose to a record high, after unemployment data showed a decrease from 6.6% to 6.5%.
Currency specialist for Morgan Stanley, Ian Stannard, stated: ‘Once the market was able to look into the overall employment report, the detail was very positive and provided a lot of evidence that the UK economy is continuing to strengthen and that strength looks to be fairly broad based.’
Furthermore it looks as if the Pound will be able to remain strong, with economists predicting a robust exchange rate with the US Dollar to continue.
An expert in the field, Benjamin Feuer, stated: ‘Sterling is one of the few currencies that has captured the interest of institutional players in the past few months. Some of the locals here believe sterling is over-valued but I think from an international perspective it is pretty fairly valued. Realistically you probably wouldn’t see it above $1.75 but you won’t see it weaken either.’
As a consequence of the bullish Pound, the Euro (EUR) dropped down below 79 pence in the exchange rate against Sterling; attaining a two year high for the Pound.
Despite the ‘Loonie’ slowly gaining some stability after initially dropping mid week, the Pound looks set to remain bullish in the Canadian Dollar to Pound exchange rate. However Canada’s Consumer Price Index data released on Friday may prove interesting for the ‘Loonie’ and could help to bolster it up again after losses this week if favourable.