Autumn budget statement could move exchange rates

UK construction data misses forecasts

After UK manufacturing data came in above forecast yesterday, many thought today’s construction data would follow suit. The GBP/CAD exchange rates started to climb in anticipation before the release, but when the actual figure came in below the forecast the pound fell back under CAD$1.78.

Tomorrow could be a very volatile day for the sterling to Canadian dollar exchange rates. There are several events and data releases coming from both sides of the GBP/CAD cross that could move the exchange rates.

Canadian rate statement

Canada have their monthly rate statement where they will announce their decision on interest rates. If they were to raise interest rates, this would strengthen the Canadian dollar and cause GBP/CAD exchange rates to fall.

Later in the day there is also a speech by the Bank of Canada governor, Steven Poloz, at a summit in Toronto. He will be defending his decision on interest rates and discussing the country’s economic outlook. All investor ears will be listening for how bullish or bearish he may be about the Canadian economy.

Autumn budget statement

The Autumn Statement, or “Mini budget” as it is known, provides an up-to-date economic outlook and is a preview of the government’s budget for the coming year. This will include expected spending, income and borrowing levels as well as financial objectives.

This will be the chancellor’s last chance to impress voters before the next general election. With this in mind, he will want to make the economic outlook as rosy as possible. If he lays out any plans viewed as too ambitious or risky, we could see the markets react in a negative way.

We also have the latest services PMI data tomorrow morning. This is a great indicator of economic health and could make a big difference in the direction of exchange rates throughout the day.

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Richard Beaumont

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