GBP/USD and GBP/CAD Exchange Rates Trending higher on Overbought US Dollar
A succession of negative domestic data publications on Monday has seen Sterling decline a little from its strong opening position. US data has been much more positive than the UK’s and the US Dollar has further strengthened as a result. With a lack of data today the Canadian Dollar is trending lower against the majority of its currency peers.
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The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.6251.
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.8117.
Last week was a successful week in terms of Sterling gains. The uptick was initiated by the Unionist victory in the Scottish independence referendum and was boosted after Bank of England Governor Mark Carney gave a speech on Thursday. In the speech Carney suggested that nearly all of the conditions for normalising monetary policy have now been met, and a benchmark rate increase is likely to occur in the near-future.
As geopolitical tensions in Syria and Iraq have escalated the US Dollar has profited from its safe-haven qualities. Despite generally mixed data last week the ‘Greenback’ (USD) continued to rise against the majority of its competitors. Yet another upward revision to the annualised second-quarter Gross Domestic Product enabled the US Dollar to gain as traders speculated on the likelihood of further success in the third-quarter. This in turn has added huge pressure on the Federal Reserve to normalise monetary policy.
A distinct lack of data hurt the Canadian Dollar last week. Last week’s Retail Sales figure declined unexpectedly and initiated a dip for the ‘Loonie’ (CAD), but the strength of the US Dollar prevented any huge declination.
The Pound Sterling to US Dollar exchange rate has hit a low today of 1.6210.
The Pound Sterling to Canadian Dollar exchange rate has hit a low today of 1.8075.
Monday’s British data has been generally poor and has caused Sterling to soften against many of its rivals. Bank of England Consumer Credit was forecast to decline from £1.10 billion to £0.85 billion, but the actual result was a fall to £0.898 billion. Mortgage Lending was expected to equal the previous figure of £2.3 billion, but the actual data dipped to £2.28 billion. Mortgage Approvals also failed to meet with the market consensus of a rise from 66, 600 to 69,000, with the actual data falling to 64, 210.
US data on Monday has been generally more positive than British data. Core Personal Consumption Expenditure eclipsed the market consensus of a fall from 1.5% to 1.4%, with the actual data equalling the previous figure. Personal Income met with the median market forecast of a rise from 0.2% to 0.3%. Personal Spending rose above expectations having increased from -0.1% to 0.5%.
Canada’s second largest natural gas producer, Encana Corp., agreed to buy Athlon Energy Inc. for US$5.93 billion, which has enabled them to gain a foothold in the most prolific US oil producing region. Encana Chief Executive Officer Doug Suttles said; ‘This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America’s top oil plays’. The potential boost for the Canadian economy has seen the Canadian Dollar hold its position against many of its currency peers despite an absence of economic data.
Forecast for the Pound to US Dollar and Canadian Dollar Exchange Rate
With several upcoming influential domestic data publications for both the US and the UK, expect volatility for the GBP/USD currency pairing. Those invested in Sterling will want to pay close attention to the Consumer Confidence Survey due for publication in the early hours of Tuesday morning, Tuesday’s second-quarter GDP, Thursday’s Construction PMI and Friday’s Composite and Services PMI’s.
Those invested in the US Dollar will want to pay particular attention to Tuesday’s Consumer Confidence, Wednesday’s Manufacturing PMI, Thursday’s labour market data and Friday’s Change in Non-farm Payrolls and Unemployment Rate.
Tuesday will be the most significant day for the Canadian Dollar with the publication of the yearly Gross Domestic Product. Wednesday’s Manufacturing PMI will also be of interest to those invested in the ‘Loonie’.
The Pound Sterling to US Dollar exchange rate has reached a high today of 1.6262.
The Pound Sterling to Canadian Dollar exchange rate has reached a high today of 1.8144.
The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.6264.
Despite lower-than-expected house price data the Pound is slowly strengthening against both the US Dollar and the Canadian Dollar. This is the result of the realisation that traders have overbought the US Dollar amid speculation of the Federal Reserve normalising monetary policy next year. Demand for the US Dollar has continued to rise even if economic data didn’t warrant it, but has now reached a plateau and is likely to soften. The Canadian Dollar has avoided huge declines by tracking the progress of the US Dollar, and so is very likely to decline over the course of the day.