GBP to CAD Exchange Rate Continues to Soften on Waning Sentiment
Having made gains earlier on Tuesday after positive UK construction output, the Pound to Canadian Dollar exchange rate has softened after Canadian Manufacturing improves upon the previous figure.
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Tuesday morning saw an unexpected result in British construction. The UK Construction PMI was forecast to fall from the previous figure of 62.4 to 61.5, but the actual data showed an increase to 64.0. Tim Moore, senior economist at Markit, commented on the surprising growth; ‘UK construction firms saw one of the sharpest rises in output for seven years in August, with increasing workloads driven by an array of factors including surging homebuilding activity, greater infrastructure spending and renewed confidence within the commercial development sector’.
David Noble, Group Chief Executive Officer at the Chartered Institute of Purchasing & Supply, suggested that the growth was seasonal stating; ‘The resurgence in construction has entrenched itself after a summer of blistering growth but builders should prepare for growing pains this autumn as the sector labours to recover lost capacity’.
Tuesday afternoon, however, saw a reversal in the Pound to ‘Loonie’ (CAD) exchange rate after the Canadian Manufacturing PMI was seen to have increased to 54.8 compared with the previous figure of 54.3. Craig Wright, senior vice-president and chief economist at RBC, explained the reason for the increase; ‘The momentum in Canada’s manufacturing sector is clearly being sustained with the index registering the ninth consecutive month of improvement […]We expect that Canadian manufacturers will continue to directly benefit from the strengthening U.S. economy, which has made and will continue to make positive strides’.
The Pound Sterling to Canadian Dollar exchange rate has hit a low today of 1.7997.
Wednesday’s Forecast for the Pound Sterling to Canadian Dollar Exchange Rate
There are several domestic data publications of varied importance for both the UK and Canada on Wednesday.
In terms of British economic data; the most influential will be the Composite PMI and the Services PMI. The UK Composite PMI registered a previous figure of 58.8.
Given that services make up the vast majority of the British economy it is unsurprising that the Services PMI will have a large influence over Sterling movement. The UK Services Purchasing Managers Index is forecast to drop from the previous figure of 59.1 to 58.5. Those invested in the Pound will be hoping the actual data eclipses the forecast in order for Sterling to begin a bullish run of its own.
A solitary Canadia economic data publication on Wednesday happens to be of very high influence on both the Canadian economic standing and ‘Loonie’ movement. The Bank of Canada will be announcing their interest rate decision which is currently at 1.00%. The vast majority of economists expect the Bank of Canada will opt to continue with the current low interest rate.
The Pound Sterling to Canadian Dollar exchange rate has continued to soften on Wednesday as reduced sentiment towards Sterling weighs heavily.
A recent government poll revealed that the significant gap between those in favour and those opposed to Scottish independence has narrowed considerably.
Those who were opposed to Scottish independence have seen their 14 point lead reduced to just six with only 15 days to go before the final decision.
The increased likelihood of an independent Scotland has seen traders pull away from the Pound in favour of less risky currencies.
Given that nearly all economists expect the Bank of Canada to maintain their current interest rate, the decision later on Wednesday is unlikely to have any major impact on ‘Loonie’ (CAD) movement.