GBP to CAD Exchange Rate Trims Gain, CAD/USD Stronger on Sales
The Pound to Canadian Dollar (GBP/CAD) exchange rate initially advanced on Wednesday as Sterling broadly strengthened in the immediate aftermath of the publication of minutes from the last Bank of England policy meeting.
If you're looking to make an international money transfer, we recommend TorFX.
The minutes revealed that of the nine-member Monetary Policy Committee, two voted in favour of increasing interest rates.
This was the first split vote recorded since 2011 and increased the odds of the BoE raising rates in November of this year, as was speculated when the UK’s unemployment rate first fell below 7%.
In the minutes it was stated that the two members who believed borrowing costs should be raised immediately ‘further noted that, while there were always likely to be risks associated with the possible financial market reaction to the first increase in Bank Rate after such a protracted period, it was unclear that these risks would be lessened, and indeed possible they would be augmented, by delaying that increase’.
The Pound recorded widespread gains after the minutes were released.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate hit a high of 1.8260.
During the North American session the GBP/CAD pairing reversed some of its previous gains as the ‘Loonie’ was buoyed by upbeat Canadian Wholesale Sales data.
Wholesale Sales were shown to have increased for a third month in June, rising by 0.6% on a month-on-month basis. A more moderate increase of 0.4% had been anticipated.
The figures indicate that Canada’s merchandise trade surplus is growing.
Of the seven main categories which make up wholesale sales, five recorded increases.
The report prompted this comment from senior economist Krishen Rangasamy; ‘Real wholesale sales grew a sizable 15.5% annualised in the second quarter, the best since the third quarter of 2009. [The results] are much in line with our view that Canada’s GDP growth accelerated sharply in the second quarter after a slow start to the year.’
The Canadian Dollar was also able to advance modestly on the US Dollar as investors held fire ahead of the publication of minutes from the recent Federal Open Market Committee meeting.
If the minutes are dovish in tone the CAD/USD exchange rate could advance further.
However, in the opinion of industry experts with UBS AG, the diverging growth outlooks for Canada and the US could see the Canadian Dollar plummet to a five-year low in the near future.
Over the next 12 months the ‘Loonie’ could shed over five cents if the US economy continues to outperform that of its neighbour.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
Tomorrow movement in the Pound Sterling to Canadian Dollar exchange rate could be generated by the UK’s retail sales figures.
If sales are shown to have increased by 0.4% on a month-on-month basis, as expected by economists, the GBP/CAD pairing could climb.
However, fluctuations in the Pound to Canadian Dollar pairing could be a little restrained ahead of Friday and the release of Canada’s Consumer Price Index.
The inflation report is expected to show that consumer prices declined by -0.1% in July, month-on-month, following a 0.1% increase in June.
The Canadian Dollar is trading against the Pound in the region of 0.5486 and against the US Dollar in the region of 0.9137.