GBP to CAD Exchange Rate Stumbles after Soft UK Inflation Data, USD Surges Following Positive Domestic Data Releases
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.8141, flowing between a low of 1.8124 and a high of 1.8225. Movement at this time is around -0.39% as a result of poorer-than-forecast UK inflation data.
Having had a particularly difficult week the Pound managed to rally against most of its peers yesterday. The difficulties emerged when the Bank of England (BoE) proposed a change in focus from unemployment to wage growth; resulting in the end of the hopeful speculation of an interest rate hike before the end of the year. However, yesterday saw a slight change of mind from Bank of England Governor Mark Carney, who stated that he will not necessarily wait for wages to increase before hiking the interest rate. The statement reignited speculation for a pre 2015 rate hike, and Sterling was bolstered across the board as a result.
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In contrast, yesterday was less impactful on the movement of the Canadian Dollar. There was only one domestic data publication which had very little influence on market movement.
The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.6617, moving between a low of 1.6609 and a high of 1.6726. Movement is around -0.62% which is due to a combination of negative UK data and positive US data.
Yesterday was fairly quiet in terms of US domestic data with only one publication. The NAHB Housing Market Index was forecast to maintain the previous figure of 53, but the actual data was shown to have risen to 55.
Today has seen the strides that Sterling made to repair last week’s damage dashed after a duo of dismal domestic data releases. The year-on-year Consumer Price Index was forecast to fall from 1.9% to 1.8%. The actual data showed a further decline to 1.6%. The Retail Price Index also showed declination dropping from 256.3 to 256.0. The poor inflation data all but reverses the renewed speculation of a rate hike before 2015.
There have been several domestic data releases of varying influence pertaining to the US. The year-on-year Consumer Price Index met with expectations, falling from 2.1% to 2.0%. Both Building Permits and Housing Starts produced results far above forecast figures. The positive data has helped maintain the Bullish run of the ‘Greenback’ (USD).
The US Consumer Price Index may have an impact on the Canadian Dollar. The 2.0% figure could indicate a rise in US borrowing costs which will impact upon the ‘Loonie’ (CAD). The Canadian Dollar has seen a slight declination today which could be a result of the US data described above, but also as a result of a lack of Canadian domestic data publications.
The Pound Sterling to Canadian Dollar has hit a low today of 1.8124.
The Pound Sterling to US Dollar exchange rate has hit a low today of 1.6607.
Forecast for the Pound to US Dollar exchange rate and the Pound to Canadian Dollar Exchange Rate
The Bank of England minutes from their last policy meeting is due for publication on Wednesday. The information is likely to be of interest as many economists speculate that at least one of the policymakers had voted against a continuation of the current low interest rate.
Tomorrow will also see the release of the Federal Reserve minutes from the July 29-30 FOMC meeting. This is of importance to those speculating on the timing of a US interest rate.
Thursday has a relatively heaped domestic data docket for both the UK and the US. Year-on-year UK Retail Sales is likely to provoke market movement and is expected to decline from 4.0% to 3.5%.
Also of interest to those invested in the Pound will be Public Finances and the Public Sector Net Borrowing reports.
In terms of US data; Continuing Claims, Initial Jobless Claims, Manufacturing PMI, Existing Home Sales, Leading Indicators and Philadelphia Fed will all be of interest to those backing the ‘Greenback’. A positive result for Initial Jobless Claims may trigger a rate hike rhetoric as the Federal Reserve have focussed on unemployment as a gauge for the timing to increase the Bank rate.
Friday will be of particular importance for the Canadian Dollar. Year-on-year Consumer Price Index, which is a key gauge for inflation in Canada, is expected to diminish fractionally from 2.4% to 2.3%. Retail Sales may also provoke market movement as an indicator of consumer confidence. It is forecast to fall from 0.7% to 0.3%.
There is a very interesting event in terms of US economic standing on Friday. The Chair of the Federal Reserve Janet Yellen, as well as European Central Bank President Mario Draghi, will be speaking at the Federal Reserve Bank of Kansas City’s conference on the economy and monetary policy in Jackson Hole, Wyoming. The words spoken will be carefully examined by traders in order to divine any clues as to rate hike timing. The combination of the words spoken here and the minutes from the Federal Reserve published on Wednesday could potentially outline the Fed’s intentions on rate increases. However, some feel that Yellen will avoid monetary policy in her speech. Stephen Lewis, chief economist at ADM Investor Services, told Reuters; ‘I don’t think she’s going to go anywhere close to monetary policy.’
The Pound to Canadian Dollar exchange rate hit a high today of 1.8225.
The Pound to US Dollar hit a high today of 1.6726.