Lawrence Schembri, the deputy Governor of the Bank of Canada is due to speak this afternoon ahead of retail sales figures and inflation data due on Friday. This data has the potential to cause some volatility in GBP/CAD exchange rates. The report below discusses why this data is likely to affect rates, taking into account the lack of positive data for the Pound at present. The table below shows the difference in Canadian Dollars you could have achieved when buying £200,000.00 during the high and low points during the past 4 weeks.
|Currency Pair||% Change||Difference on £200,000|
Ever since the Bank of England decided to keep interest rates on hold last week, Sterling has really struggled to regain any kind of momentum, even against the riskier commodity-based currencies like the Canadian Dollar where it remains marooned under the 1.74 mark. It feels to me that the Pound’s value is now very much at the mercy of investors who will likely shift their sterling positions as and when data from opposing currencies show a more favourable outlook.
This view might be reflected on the GBP CAD pairing, with very little coming out from Canada so far this week to shake the rates up, Sterling has remained range bound.
The second half of this week however does promise volatility with probably far more downside risk for Sterling holders.
It all kicks off with Deputy governor of the bank of Canada Lawrence Schembri who is due to speak at 4pm this afternoon and the markets are expecting him to set the tone before the key retail sales figures coupled with Inflation levels due on Friday. Despite the shaky track record of the 2 towards the end of last year, the recent trend has been particularly positive which has buoyed investor confidence, helping the Canadian Dollar to capitalise on Sterling’s recent fall from grace since the start of the month. I would imagine the markets will be holding out for similar results to close this week and should these releases continue to outperform expectations I feel there is more chance GBPCAD rates will edge closer to the 1.70 mark than spring back towards the 1.75s.
With Brexit pressures beginning to mount UK side, it may be a bit too ambitious to hold out for long term sterling gains. Whilst the pound sits so unfavourably with the markets, those looking to buy Canadian dollars may be wise to try and plan around the next potential short-term opportunities.
Last week the Canadian dollar took a slight hit as domestic data showed a slowdown in new jobs created. I wouldn’t be surprised to see a similar story in tomorrow’s release in employment levels then, potentially offering those looking to buy Canadian dollars with a brief spike to capitalise on.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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