Pound to Canadian Dollar Forecast – The move against the Canadian Dollar was triggered by weaker than anticipated data

Written by on March 20th, 2012

Pound to Canadian Dollar Exchange Rate Forecast - The move against the Canadian Dollar was triggered by weaker than anticipated dataIf oil prices do re-trace and Friday’s Canadian inflation data shows that the rate of domestic price rises is cooling, then the GBP CAD exchange rate could head higher.

Foreign Currency Market Update – GBP / CAD Update

The Canadian Dollar started last week’s session on the front foot, following strong US employment sector data, released at the end of the preceding week. This saw the GBP CAD exchange rate drop to 1.5464 on Tuesday, its lowest level since 19th September last year. However, the CAD rapidly lost its lustre in the eyes of investors, as the week progressed, taking GBP CAD all the way up to 1.5739 on Friday afternoon.

The move against the Canadian Dollar was triggered by weaker than anticipated data from Canada’s major trading partner – the USA – late on Friday. The closely-watched US Michigan Confidence survey and US Industrial Production numbers for February came out significantly weaker than anticipated, bucking the recent trend of encouraging US data releases. This spells bad news for Canada’s economy, which is highly dependent on the export of commodities.

Global oil prices remain at the top of their recent range, with a barrel of Brent Crude currently trading in the mid-$120s, which is good news for the CAD. However, wholesale oil prices have traded close to this level for the whole of March, without breaking higher, so the potential remains that prices will ease as market participants feel more relaxed about tensions in Iran. If oil prices do re-trace and Friday’s Canadian inflation data shows that the rate of domestic price rises is cooling, then the GBP CAD exchange rate could head higher, with February’s 2012 high of 1.5943 the interim target. Conversely, any suggestion in tomorrow’s Bank of England minutes that a further easing of the UK’s monetary policy is on the cards, could see a renewed run at last week’s 6-month low of 1.5464 for the pair.

Heads Up

Summary of major upcoming data releases that we think may move the market.

Related posts:

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  2. Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – The Canadian dollar had a good week
  3. The Pound staged an impressive rally against the Canadian Dollar
  4. Pound Sterling to Canadian Dollar Foreign Currency Exchange Rate Forecast – CAD rallies on gold surge
  5. Canadian Dollar Foreign Exchange Rate Forecast – Canadian second quarter growth figures due out today

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