The GBP CAD exchange rate held below its 7-month high of 1.6206.
Foreign Currency Market Update – GBP / CAD Update
The GBP CAD exchange rate held below its 7-month high of 1.6206 over the past week…but not much below. The Canadian Dollar suffered its most significant blow of the past seven days last Friday afternoon, with the release of the latest set of official domestic CPI inflation data. The figures revealed that the rate of Canadian price rises is cooling at a faster pace than analysts had been anticipating, making it highly unlikely that the Bank of Canada will countenance a hike in interest rates in the near-term. The easing of rate expectations by institutional investors triggered a move out of the Canadian Dollar, taking the GBP CAD exchange rate back above the 1.6000 level on Friday afternoon. Prior to this, the pair had been under some selling pressure following the release of the minutes of the most recent Bank of England monetary policy committee meeting on Wednesday morning. The minutes caught market participants on the back foot, revealing that four of the Bank’s nine-man committee had voted in favour of an increase to the UK’s Quantitative Easing programme. It now looks highly likely that the BoE will opt to extend QE next month; this provoked a shift out of Sterling – denominated assets which was only reversed with the release of the Canadian inflation figures.
Early trading this week has seen renewed downside pressure on the CAD as global share markets gave up ground ahead of this week’s eurozone debt summit. Fears abound that the meeting will bring an unseemly row between Greek representatives and delegations from the wealthier Northern European states, following recent calls from the new Greek Prime Minister, Antonis Samaras, for the terms of his country’s bailout agreement to be relaxed. Europe is one of the largest markets for Canada’s major export – crude oil – so escalated friction in the region spells bad news for the Canadian Dollar. With the latest set of GDP growth figures penned in for release in the UK on Thursday and Canada on Friday, the potential exists for considerable price action for GBP CAD later in the week. A combination of stronger than anticipated UK GDP figures and a disappointing set of Canadian numbers would bring last month’s near-term high of 1.6206 into view, whilst the opposite outcome could trigger a concerted move lower for the pair, with March’s 9-month low of 1.5464 providing a key interim floor.
Summary of major upcoming data releases that we think may move the market.
- Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – The Canadian dollar had a good week
- Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – CAD rallies on gold surge
- Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – Sterling Rebounds from Technical Support
- Pound Sterling to US Dollar Foreign Currency Exchange Rate Forecast – Sterling hits 15 month high…
- The Canadian Dollar came under selling pressure in the early part of the week