The forward move for GBP CAD has continued into this week, with the pair breaking to its highest level in six weeks at 1.5859 during today’s session.
Foreign Currency Market Update – GBP / CAD Update
The absence of major data releases from the UK and Canada did not stop there being considerable price action for the GBP CAD exchange rate over the past seven days. The pair had started last week trading with a negative bias, which took it down to its lowest level this month at 1.5565 during Tuesday’s session. The market rejected this rate almost instantly, sending GBP CAD back into the 1.5700s again on Wednesday. Although Thursday afternoon’s announcement from the US Federal Reserve that it is set to re-start its Quantitative Easing programme caused a temporary downward blip, the pair quickly re-established its near-term upward momentum to end the week at 1.5755.
The forward move for GBP CAD has continued into this week, with the pair breaking to its highest level in six weeks at 1.5859 during today’s session. The move higher has been fuelled by broad Canadian Dollar weakness due to fears over the strength of economic growth in the global economy. These concerns have been driven by yesterday’s announcement by US President Barack Obama that he has filed a complaint with the World Trade Organisation over China’s payment of subsidies to companies in its massive car manufacturing sector. The last thing the world economy’s febrile recovery needs at this stage is a bitter trade war between its two major economic superpowers. China provided further cause for concern yesterday, when images emerged of anti-Japan protests on Chinese streets, prompting several Japanese companies to partly suspend their Chinese production.
If the evidence mounts that Japan, China and the US are willing to place the tentative global economic recovery in peril for reasons of self-interest, then the Canadian Dollar may suffer further downside in the near-term, taking the GBP CAD up towards its 2012 high of 1.6206. However, with the price of a barrel of crude oil trading at close to a 4-month high during yesterday’s session, and the possibility existing that tomorrow morning’s Bank of England minutes may hint at further QE for the UK economy sooner rather than later, a renewed downward move for GBP CAD can not be ruled out. If such a break lower transpires, then the first target on the downside would be last week’s key interim low at 1.5565.
Summary of major upcoming data releases that we think may move the market.
- The forward move for GBP ZAR over the past week has been driven by Rand weakness
- The forward move for GBP AUD was triggered by the news that four large US retail banks had failed the most recent Federal Reserve stress test
- Pound to Canadian Dollar Forecast: The Pound fell to a 4-month low of 1.5686 against the Canadian Dollar
- Pound to Canadian Dollar Forecast: The Canadian Dollar was the slowest commodity-currency
- Pound to Canadian Dollar Forecast: The GBP CAD exchange rate held below its 7-month high of 1.6206