The Canadian Dollar struggled to re-assert itself in the currency markets following the release of dismal Q1 GDP data at the start of last week’s session.
Foreign Currency Market Update – GBP / CAD Update
The Canadian Dollar struggled to re-assert itself in the currency markets following the release of dismal Q1 GDP data at the start of last week’s session. Friday afternoon’s US Non-Farm Payrolls figures for April banged the final nail into the Canadian currency’s coffin for the week, when they revealed that America’s vast economy had only managed to create 115,000 new jobs last month. This was far below analysts’ expectations of an increase of 160,000, spelling bad news for Canada’s economy which is heavily dependent on exports of raw materials to the US.
The weak US jobs data caused the GBP CAD exchange rate to breach the 1.6000 level once again. The pair ended the week at 1.6084, within a whisker of its highest level since Christmas week, having briefly traded below 1.5900 during Thursday’s session, following the release of tame UK house price numbers.
The Sterling Canadian Dollar chart has shown the classic features of an ‘uptrend’ since the middle part of March, when the pair dropped to its near-term low of 1.5464. Since then, the chart has been snaking upwards, with the highs getting higher and subsequent lows getting higher as well. This week’s session has seen GBP CAD break to a new 18-week high, with the Canadian currency coming under renewed selling pressure thanks to question marks over the fiscal position of another of its major trading partners – the eurozone. An indecisive result in Greece’s general election means that a power-vacuum is likely to form in the debt-addled Hellenic state. Even more worryingly, almost seven out of ten of the electorate who cast a vote in the election, chose to support ‘anti-bailout’ parties. In the cradle of democracy, this must count for something – if it eventually leads to Greece reneging on the terms of its EU/IMF/ECB bailout funding, then a catastrophic Greek default would ensue. This would hit the Canadian economy and the Canadian Dollar harder than most others, due to their dependence on the future prospects of the global economy. Such a scenario would be likely to precipitate a renewed run at its 27-month high 1.6475 for GBP CAD. Alternatively, with the UK economy having sunk into a double dip recession, further weak UK economic releases could send the pair back down towards its key interim floor at 1.5464 in the near-term.
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
- The Canadian Dollar put in a tame performance in the currency markets
- 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
- The Australian Dollar struggled to assert itself against the Pound in the first two days of last week