The Pound Canadian Dollar (GBP/CAD) exchange rate is surging this afternoon, climbing over half a cent in the wage of Canada’s weak employment figures.
Canadian Dollar (CAD) Slides Following Sharp Contraction in Employment
The Canadian Dollar (CAD) is on the ropes this afternoon, falling sharply against the Pound (CAD) as markets react to Canada’s latest employment figures.
According to data published today, Canada cut 51,600 jobs in August, after adding 54,100 the month before.
This sharp contraction in employment growth came as a shock to markets after forecasts had suggested employment growth would rise by a modest, but still positive 5,000.
The slump in employment growth led to Canada’s accompanying jobless figures revealing that domestic unemployment rose from 5.8% to 6% in August, matching the 10-month low stuck in June.
However it wasn’t all doom and gloom, as the drop was fueled by a loss of 92,000 part-time positions last month, masking a rise of 40,400 full-time jobs.
Pound (GBP) Climbs following Positive Barnier Comments
Meanwhile the Pound (GBP) is flying high this afternoon as comments from EU’s chief negotiator Michel Barnier indicate that positive progress is being made in Brexit negotiations.
Sterling sentiment soared following his comment he suggested that the EU was committed to reaching an agreement with the EU as he said:
‘We want to establish the closest relationship possible with your country – and I will be saying this in greater detail later – and what will be an unprecedented relationship. We are determined to find an agreement. Let me repeat also that the no-deal scenario is not our scenario.
However Barnier also reiterated the importance for the UK to reach an agreement over the Irish border, saying.
‘Brexit without a backstop would create a problem for Northern Ireland, and the inhabitants of the island of Ireland we think are entitled to some certainty regarding the conditions for future co-operation between the two countries.
‘Ireland remains the crucial issue if we are to get an agreement, but if there is no operational backstop on Ireland, there will not be an agreement.’
Barnier’s comments today are a far-cry from remarks he reportedly made earlier in the week in which he supposedly said that Theresa May’s Chequers plan was ‘dead in the water’.
GBP/CAD Exchange Rate Forecast: Will Upbeat Policy Outlook from the BoE Bolster Sterling?
Looking ahead to next week’s session, movement in the Pound Canadian Dollar (GBP/CAD) exchange rate is likely to be driven by the Bank of England’s September policy meeting.
Having raised interest rates just last month, the BoE is not expected to make any alterations to monetary policy following the conclusion of its policy meeting on Thursday.
Instead GBP investors are likely to be focused on the bank’s economic outlook, with the Pound potentially strengthening should the BoE strike a broadly upbeat tone.
However Sterling could face some headwinds in the run up to the meeting following the release of the UK’s latest labour figures, with economists forecasting that domestic unemployment will have climbed back up from 4% to 4.2% in July.
Meanwhile the absence of any notable data could limit the Canadian Dollar’s potential to hold off the Pound next week, especially if it leaves markets to focus on the ongoing uncertainty surrounding NAFTA negotiations between the US and Canada.
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TAGS: Pound Canadian Dollar Forecasts