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GBP/CAD Exchange Rate Slips as Canadian Inflation Rises

Last week’s high: CA$1.7269

Last week’s low: CA$1.6876

 

Canadian Dollar Boosted by Impressive Inflation

Last week saw the Canadian Dollar (CAD) jump against the Pound in the hours leading up to the Brexit vote in the UK Parliament on Tuesday.

After Theresa May’s historic loss in Parliament, the Pound fought back, as markets believed that the possibility of a no-deal Brexit had decreased significantly.

The GBP/CAD exchange rate continued its rally on Thursday as May’s government survived a vote of no-confidence that had been triggered by leader of the opposition, Jeremy Corbyn.

On Thursday, a report in The Wall Street Journal that the US was considering lifting tariffs on Chinese imports eased investor worries as it signalled a possible end to US-China trade tensions, benefitting the risk sensitive Canadian Dollar.

Friday morning saw the pairing fall as worse-than-forecast British retail sales figures for December were released, showing that sales had declined the furthest since March 2018.

Further gains by the Canadian Dollar in the session on Friday were likely a result of the better than expected Canadian CPI for December, which rose to 2%.

 

CAD Outlook: Poor Canadian Retail Figures could Drag on CAD

Today will see Theresa May present her ‘Plan B’ to Parliament, with a debate and another vote to follow; if the likelihood of a no-deal Brexit increases, the Canadian Dollar could make gains on the Pound.

Tuesday could see increased sentiment for the Pound if UK average earnings for January remain at a steady rate of growth or increase higher than forecast.

Sterling might experience further gains if January’s UK unemployment figure remains steady at 4.1% as forecast, or decreases.

Mid-week is the release of Canadian retail sales figures for November, with the potential for any gains made by the Canadian Dollar likely to be limited by a poor figures, as the forecast suggests a fall of -0.5%.

 

Key Events

22nd January

09:30     GBP Average Earnings (3Mo/Yr) (Jan)

09:30     GBP ILO Unemployment Rate (3M) (Jan)

09:30     GBP Claimant Count Change (Jan)

09:30     GBP Public Sector Net Borrowing (Dec)

23rd January

13:30     CAD Retail Sales (MoM) (Nov)

 

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To keep up to date with the Canadian Dollar, visit the CAD blog in our Currency News section.

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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