While poor data failed to bolster the Canadian dollar exchange rates, the British pound sterling (GBP) will need strong data this week to maintain its upward trend. A risk-on market movement could give the CAD exchange rates a speedy recovery.
Should oil prices fail to pull through, the Canadian dollar to pound exchange rate may continue to flop in the near-term.
One of the greatest limiters on CAD exchange rates movement of late has been the price of crude oil on the WTI index.
Although it was rising earlier on, the cost of the commodity has since slumped from over $44.50 per barrel to almost $43.50.
With reports relating to the raging Alberta wildfires causing investors to question Canada’s future economic stability, the Pound Sterling to Canadian Dollar exchange rate was able to advance on Monday.
The GBP/CAD pair climbed by over 0.5% during the European session and consolidated gains after Canada’s Housing Starts figure declined from 204.3k to 191.5k in April.
With a speech from the Bank of Canada (BOC) still to come, further GBP/CAD movement could occur.
"Oil prices remain vulnerable in an environment of renewed USD strength and rising risk aversion, and risk reversals are steady consolidating this week’s shift and rise in the relative cost of protection against downside risk in CAD." Scotiabank
Throughout last week the British pound to Canadian dollar exchange rate continued to climb, starting from the week’s low of 1.8285 on Monday before finally peaking at a new-month-high of 1.8712 on Friday.
The GBP/CAD’s gains were relatively moderate on Friday, as the pair mostly traded around 0.2% up in the region of 1.8660.
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Latest US Dollar/Canadian Dollar Exchange Rates
On Sunday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
The GBP to USD exchange rate converts at 1.249 today.
Please note: the FX rates above, updated 28th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
GBP/CAD Exchange Rate Slows Rally into Weekend after Bullish Week
While GBP/CAD initially traded flatly on Friday as investors grew bearish towards the Pound, the pair was allowed to advance slightly after mixed Canadian data weighed the ‘Loonie’ down.
Sterling was prevented from gaining even more bullish gains against the Canadian Dollar due to the week’s disappointing UK PMI, all of which printed below expected in what economists have called a ‘triple-whammy’ of bad reports.
Britain’s key Composite PMI report dropped from 53.6 to 51.9, undermining forecasts that it would merely slow to 53.2.
The figure was accompanied by analysis from economists that indicated the UK economy could be nearing stagnation as a result of ‘Brexit’ concerns taking hold of businesses.
However, the Canadian Dollar’s strength was undermined even more due to large risk-off movements influenced by the fluctuating price of Oil. Prices of Canada’s most lucrative commodity briefly rallied following a supply shortage, but a strengthening US Dollar made up for the shortage and prices fell again, decreasing appeal for the oil-correlated Canadian Dollar.
Canada’s employment change score of -2.1k also disappointed investors, as it was expected to remain steady. Nontheless, the key Canadian unemployment rate remained at 7.1%, despite being estimated to worsen to 7.2%.
Pound Sterling (GBP) Exchange Rates Forecast: British Trade Balance on Tuesday, Followed by BoE Meeting
The Pound’s strength may be bolstered if the upcoming week’s economic calendar results in positive British data. Tuesday sees the release of the March update to the UK’s trade deficit figures, which printed at £-4.84b in its February report.
If the deficit narrows more than analysts predict, it would improve British economic sentiment and the Pound would strengthen.
The deficit report is followed by industrial and manufacturing production prints on Wednesday, as well as NIESR’s April GDP estimate. Some economists have predicted that Britain’s GDP could drop to 0.2% or 0.1% due to last week’s near-stagnant PMI, so the figure is likely to hurt the Pound if it reflects this possibility.
Lastly, the Bank of England (BoE) is due to announce its latest rate decision and inflation report on Thursday. The rate decision is unlikely to leave the Pound particularly inspired as there is a wide analyst consensus that policies will continue to remain frozen.
Canadian Dollar (CAD) Exchange Rates Remain Volatile, Will the Oil Price Crisis Develop?
Oil prices are likely to continue fluctuating in the coming week as commodity markets focus a large amount of attention on the supply and price of Canada’s most lucrative commodity.
An ongoing wildfire in Canada hit oil sands around the area of Fort McMurray and caused a considerable dent in oil production. At the time of writing, the fire continues to blaze throughout the town, destroying civilian and business buildings that could have a lasting effect on confidence in the region.
In terms of data, Canada’s upcoming economic calendar is quieter than Britain’s. A housing start report is due on Monday afternoon, with housing price index data due later in the week on Thursday.
Sterling to Canadian Dollar Forecast: Oil Developments to Inspire Most Movement
As the previously bullish movement of the Pound Sterling to Canadian Dollar exchange rate was caused by a lack of appeal in risky commodity currencies, a plummet in GBP/CAD is also most likely to be influenced by a shift in risk.
However, with the recently unpredictable prices of oil alongside other commodities and Asian stocks, any risk-on movements may be temporary at best and unable to assist a ‘Loonie’ recovery.
Failing that, the Pound will likely take focal point in the coming week. pound to Canadian dollar rate could see movement as soon as Tuesday’s UK trade deficit report.