Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted despite ‘Encouraging Start to 2020’
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained muted, leaving the pairing trading at around CA$ 1.7235.
Sterling was provided with a boost after the latest flash PMI data showed that the private sector returned to growth in January.
The UK PMI composite jumped from 49.3 in December to 52.4 in January, the first time the headline index has posted growth since August 2019.
Commenting on the data, Markit’s Chief Business Economist, Chris Williamson noted:
‘The survey data indicate an encouraging start to 2020 for the UK economy. Output grew at the fastest rate for sixteen months amid rising demand for both manufacturing and services, suggesting business is rebounding after declines seen late last year. Intensifying political and economic uncertainty ahead of the general election has started to ease, encouraging more spending and helping push business expectations of future growth to its highest since mid-2015.
‘It seems likely that the rise in the PMI kills off the prospect of an imminent rate cut by the Bank of England, with policymakers taking a wait and see approach as they assess the performance of the economy in the post-Brexit environment.’
Canadian Dollar (CAD) Flat as Oil Prices Rise
The oil-sensitive Canadian Dollar was left flat on Friday as oil proceed jumped after a drawdown in US crude stocks.
However, the ‘Loonie’ remained muted as prices were set to fall over the next week over fears of oil demand.
Commenting on this, market strategist at AxiTrader, Stephen Innes said:
‘[The] sell-off on the […] flu scare was mollified by a timely decline in US crude inventories.
‘Oil prices could remain on a slippery slope as traders remain incredibly twitchy about the effects the coronavirus outbreak could have on Chinese GDP and air travel more broadly.’
Worries increased that the new coronavirus that originated in China, which has killed 26 people will spread and weaken fuel demand and economic prospects.
Commenting on this, senior market analyst at OANDA, Jeffrey Halley noted:
‘Oil’s sell-off [for the week] continued at pace as fears continued about the effects on global demand from a virus-induced economic slowdown in Asia. We would expect the fragility in oil prices to continue.’
Pound Canadian Dollar Outlook: BoE in Focus
Looking ahead to this afternoon, the Canadian Dollar (CAD) could slide against the Pound (GBP) following the release of November’s retail sales data.
If retail sales slump further than expected, following October’s disappointing results, the ‘Loonie’ will fall.
Meanwhile, Sterling could edge higher as next week’s Bank of England (BoE) monetary policy meeting fast approaches.
If the chance the bank will ease monetary policy in January continues to decrease, the Pound Canadian Dollar (GBP/CAD) exchange rate will rise.
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TAGS: Pound Canadian Dollar Forecasts