Pound to Canadian Dollar (GBP/CAD) Exchange Rate Softens on British Inflation
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Although commodities including Brent crude oil and iron ore are struggling amid slowing growth in China, the ‘Loonie’ was able to hold its own against the Pound on Monday.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate hit a high of 1.8036
Sterling struggled amid conflicting Scottish independence poll results. While the majority of polls have the nationalists ahead, all indicate that the vote will be a very close run thing.
The GBP/CAD exchange rate extended declines after Canada’s Existing Home Sales report showed a 1.8% increase in August, month-on-month. This followed an increase of 0.8% in July.
According to the Canadian Real Estate Association; ‘Sales picked up in some of Canada’s most active and expensive real estate markets which fuelled another national increase. Even so, the national increase in sales does not reflect local trends in many markets across Canada.’
The Canadian Dollar to US Dollar (CAD/USD) exchange rate was weaker as trading began on Monday and the prospect of a Federal Reserve interest rate increase took a toll. The disappointing industrial production and retail sales figures published by China over the weekend also had an impact.
In the opinion of industry expert Dominic Schnider; ‘China is a challenge at the moment. The US Dollar is going to be on the strong side and that’s a burden to commodities.’
The Chinese data, published at the weekend, showed that industrial production eased to its slowest pace for six years in August.
Industrial output rose by 6.9% instead of climbing the 8.8% anticipated.
That being said, the Canadian Dollar later rallied against its US counterpart as US Industrial and Manufacturing Production figures fell short of expectations.
US Industrial Production declined by -0.1% rather than rising the 0.3% anticipated in August while Manufacturing Production fell by -0.4%, also defying expectations for a month-on-month increase of 0.1%.
The US Dollar fluctuated against several of its rivals after the report was published.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
Canada’s economic calendar is fairly sparse until Friday, when the nation will publish its Consumer Price Index for August.
The only other Canadian report to be aware of, tomorrow’s manufacturing sales figure, is unlikely to cause much ‘Loonie’ movement.
The direction taken by the Pound to Canadian Dollar exchange rate next week is likely to be dictated by UK developments, in particular the nation’s inflation and employment data, the Bank of England’s meeting minutes and the result of the highly-anticipated Scottish referendum.
Any Pound-supportive results, like strong employment gains, a divided MPC vote or a unionist victory, could help the GBP/CAD exchange rate advance.
The Canadian Dollar is trading against the Pound in the region of 0.5564 and against the US Dollar in the region of 0.9038.
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.7888.
Although the British Consumer Price Index fell in line with the market consensus of a 1.5% growth; the data indicates that the Bank of England isn’t likely to hike rates for some time to come. This is because inflation is heading away from the 2.0% target set by the BoE. The result at this early stage is to see the Pound trending low against many of its major peers.
With the Scottish bid for independence still weighing Sterling down it is unlikely that the British currency will make any significant gains on Tuesday.
Tuesday afternoon’s Canadian data is of much less significance than that if the UK in terms of wider market movement. Manufacturing Sales is expected to increase from 0.6% to 1.1% in July.