GBP/CAD News: Pound Sterling to Canadian Dollar Exchange Rate Rises on Services PMI Growth

July 4, 2018 – Written by Tim Boyer

On Tuesday, the Pound opened trading against the Canadian Dollar in the region of 1.7329.

There was significant GBP/CAD exchange rate volatility during the day, but Pound Sterling ultimately closed trading at a higher exchange rate of 1.7341.

The day’s main UK news concerned the construction PMI for June, which printed above expectations by showing growth instead of a slowdown as forecast.

Yesterday’s Canadian economic data was also positive, although this failed to lead to CAD/GBP exchange rate gains.

Reports showed that June’s RBC manufacturing PMI had grown from 56.2 points to 57.1; as with the UK construction PMI, economists had forecast a converse slowdown for the reading.

Pound to Canadian Dollar: GBP/CAD Exchange Rate Rises on Strong UK Services PMI

The Pound (GBP) has risen against the Canadian Dollar (CAD) today, hitting an exchange rate of CA$ 1.7376.

This appreciation follows the news that the UK services sector grew in June, beating forecasts for stagnation.

The reading has raised confidence that there could be resilience in the UK economy in the run-up to Brexit proper; more immediately there are hopes that the Bank of England (BoE) will now raise interest rates in August.

Voicing these sentiments, IHS Markit Chief Business Economist Chris Williamson said:

‘Stronger growth of service sector activity adds to signs that the economy rebounded in the second quarter and opens the door for an August rate hike, especially when viewed alongside the news that inflationary pressures spiked higher.’

Worries about NAFTA Talks Drag CAD/GBP Exchange Rate Down

The Canadian Dollar (CAD) has fallen against the Pound (GBP) and other currency peers today, as concerns about the eventual outcome of North American Free Trade Agreement (NAFTA) talks grow.

The trade deal, which involves the US, Canada and Mexico, has come under heavy criticism from US President Donald Trump.

Renegotiation talks began after Mr Trump became President, but have since stalled due to ground-shifting events in all three member nations.

Mexico has just resolved its own Presidential election, but there are still US mid-term elections in November 2018 and a Canadian general election in October 2019 to go.

Despite the potential for a long delay before concluding talks, there are significant concerns that the US could abruptly leave the deal and cause major disruption and economic damage to Canada.

Pound Sterling to Canadian Dollar Exchange Rate Forecast: Can GBP/CAD Rise on BoE Governor Speech?

The Pound (GBP) could extend its current lead against the Canadian Dollar (CAD) on Thursday morning, when Bank of England (BoE) Governor Mark Carney will give a speech.

Mr Carney is due to visit North East England and after today’s strong services data, might drop hints about an upcoming interest rate hike.

If this does occur then the GBP/CAD exchange rate could rise sharply, as it would tie into existing expectations for higher interest rates before the end of 2018.

That said, there is no guarantee that Mr Carney will make such an explicit statement, so the Pound could continue to trade steadily against the Canadian Dollar on Thursday morning.

On the other side of the pairing, there will be high-impact Canadian economic data out on Friday afternoon which could cause late-week CAD/GBP exchange rate gains.

The data in question will be May’s trade balance reading, along with employment and unemployment rate figures and a broad measure of business activity.

Taking these in order, Canada’s trade deficit from April is predicted to have grown in May, so this reading may not cause a Canadian Dollar advance.

The jobs figures may prove more supportive – June’s unemployment rate is expected to remain at 5.8% but 24k more people are forecast to have found employment during the month.

Additional CAD support may come from the Ivey PMI for June, which measures general economic activity across the country.

This previously printed at 62.5 points in May and is anticipated to show a CAD-supporting rise up to 63.2 points for June’s reading.

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Canadian Dollar Forecasts