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Signs of Slowing Canadian Economy Fail to Shore up GBP/CAD Exchange Rate

Last week’s high: C$1.6988

Last week’s low: C$1.6713

Underwhelming Canadian Data Limits GBP/CAD Exchange Rate Downside

As the Canadian housing market continued to show signs of weakness the mood towards the Canadian Dollar soured.

CAD exchange rates also came under pressure as a result of a disappointing third quarter capacity utilisation rate, which unexpectedly slumped from 84.1% to 82.6%.

With businesses showing less willingness to invest and expand production confidence in the outlook of the economy naturally diminished.

Softness within the oil market also kept the Canadian Dollar under pressure over the course of the week.

However, the GBP/CAD exchange rate struggled to capitalise on this weakness in the face of persistent market anxiety over Brexit.

Although Theresa May saw off a leadership challenge, meaning Conservative MPs cannot attempt to oust her again for another twelve months, this failed to hold up the Pound for long.

As EU leaders refused to reopen discussions on the Withdrawal Agreement in order to smooth its passage through Parliament an element of uncertainty continues to hang over the Pound.

CAD Outlook: Weaker Inflation to Increase Pressure on Canadian Dollar

As forecasts point towards an easing in November’s Canadian consumer price index the appeal of the Canadian Dollar could diminish further this week.

If inflationary pressure eases this is likely to encourage the Bank of Canada (BOC) to leave interest rates on hold for longer, to the detriment of CAD exchange rates.

With confidence in the underlying health of the Canadian economy already limited any disappointing data could easily extend the Canadian Dollar’s losses.

UK politics looks set to remain a key driving force of the GBP/CAD exchange rate for the foreseeable future, meanwhile.

However, a more dovish message from Thursday’s Bank of England (BoE) policy announcement may prompt a fresh slump for the Pound.


Key Events

17th December

14:00   Canada Existing Home Sales

18th December

13:30   Canada Manufacturing Sales

19th December

09:30   UK Consumer Price Index

13:30   Canada Consumer Price Index

20th December

12:00   UK Bank of England Rate Decision


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

Alastair Archbold

Currency Trader

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