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GBP/CAD Unable to Hold onto Highs as Canadian Jobs Report Impresses

Last week’s high: C$1.7271

Last week’s low: C$1.6987


Brexit Uncertainty and Strong Canadian Data Knocks GBP/CAD from Highs

The Pound to Canadian Dollar exchange rate climbed at the end of last week thanks to a combination of Brexit hopes and market risk-aversion, but the pair was unable to hold its best levels as the Canadian Dollar was bolstered by an impressive Canadian job market report.

Demand for the Canadian Dollar rose due to a surprising strong jump in new jobs in January. The employment change figure was forecast to climb to 8k, but instead surged from -1.3k to an impressive 66.8k.

Canada’s key unemployment rate did worsen from 5.6% to 5.8% in January, but this was largely due to a surprising rise in the participation rate from 65.4% to 65.6%.

Canadian housing starts were also a little stronger than forecast in January.

These reports supported the Canadian Dollar, but GBP/CAD still ended last week stronger. The Pound climbed on speculation that the government could still pass its soft Brexit plan, while the Canadian Dollar’s demand was limited by a rise in US-China trade tensions.


CAD Outlook: Canadian Trade Data and Brexit Developments Anticipated

Market risk-sentiment is likely to remain influential for the Canadian Dollar next week, with US-China trade negotiations still in focus. If negotiations continue, the Pound could fall against the trade-correlated Canadian Dollar.

However, upcoming Canadian data is likely to influence the Canadian Dollar in the coming sessions as well.

Monday will see the publication of Canada’s December trade balance results, with more influential data due towards the end of the week including December’s new housing price index, December manufacturing sales, and ADP’s January employment change results.

If these impress investors, the Pound to Canadian Dollar exchange rate will struggle to climb further next week.

The Pound may also see fresh weakness if there are no notable Brexit developments, which would worsen no-deal Brexit jitters.

On the other hand, if UK-EU negotiations go well or there are signs that the formal Brexit date could be delayed, the Pound could strengthen.



Key Events

11th February

09:30 UK Trade Balance

09:30 UK Growth Rate

09:30 UK Industrial and Manufacturing Production

09:30 UK Business Investment

13:30 Canadian Trade Balance

14:00 UK NIESR Growth Estimate

13th February

09:30 UK Inflation Rate

14th February

13:30 Canadian New Housing Price Index

13:30 Canadian Manufacturing Sales

15th February

09:30 UK Retail Sales

13:30 Canadian ADP Employment Change


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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

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