Yesterday’s weak Canadian growth numbers have seen the GBP CAD exchange rate break back above the 1.6000 level.
Foreign Currency Market Update – GBP / CAD Update
The Canadian Dollar has started this week’s session firmly under the cosh, following the release of highly disappointing Canadian GDP growth figures yesterday afternoon. The data revealed that economic activity contracted by 0.2% during the month of February; investors had been expecting the figure to show a month-on-month increase in GDP of 0.2%. Analysts have blamed the disappointing data on external factors, with slowing demand for raw materials from the Chinese, European and US economies hurting Canada’s export-led economy.
Last Tuesday saw the release of another piece of worrying Canadian data, when Retail Sales numbers for February were published. These figures pointed to a surprise monthly decline in shop sales, suggesting that domestic demand is ebbing as Canadian consumers postpone big-ticket purchases due to fears over the future health of the economy.
Sterling had begun last week’s session in fine fettle against the CAD, with the GBP CAD exchange rate breaking to 1.6066 last Monday. This was the pair’s highest level since before Christmas. However, by Monday evening, GBP CAD was trading back down below the 1.6000 level again, as speculators stepped in to take profits at top-of-the-range rates. Wednesday morning saw a major move out of Sterling-denominated assets when initial UK GDP growth figures for the first quarter of 2012 were released by the Office of National Statistics. These numbers revealed that the British economy has contracted for the second quarter in succession, meaning that the UK had slipped into a double-dip recession. The worrying data saw investors shift out of the Pound, taking GBP CAD all the way down to a weekly low of 1.5840.
Yesterday’s weak Canadian growth numbers have seen the GBP CAD exchange rate break back above the 1.6000 level. A move above last week’s 2012 high of 1.6066 would send out a positive indicator for the pair, setting February 2010′s 26-month high of 1.6475 as a potential target. However, more negative UK data could rapidly send GBP CAD back into the 1.5000s, with last July’s key interim floor of 1.5250 providing a marker on the downside.
Summary of major upcoming data releases that we think may move the market.
- Pound to Canadian Dollar Forecast – The Canadian Dollar was strongly supported against the Pound during the early part of last week’s trading session
- The Pound tested lower against the Canadian Dollar during last week’s session
- The Pound has started 2012 firmly on the back foot against the Australian Dollar
- Pound to Canadian Dollar Forecast – The Canadian Dollar weakened against the Pound during the first half of last week’s trading session
- Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – The Canadian dollar had a good week