The recent fall in oil prices coupled with a stronger US economy has seen the Canadian Dollar fall against a number of major currencies, except Pound Sterling.
Under normal circumstances, we would expect to see GBPCAD strengthen off the back of such news, however Brexit concerns remain the main driver of exchange rate changes. Although CAD releases this week are dry, I am predicting further falls in exchange rates today.
Following on from last week’s net change in employment, which saw massive falls of 31k, GBPCAD rates rose over the weekend before falling back to levels of 1.71. A similar pattern was witnessed when the RBA (Reserve Bank of Australia) cut their base rate to 1.5% last week, markets reacted to the news before rates returned to levels prior to the announcement. It would appear economic releases that favour Sterling have limited impact on rates, Brexit remains the number one concern for markets.
With this in mind, today’s UK manufacturing and industrial output figures could put further pressure on the Pound given the poor PMI data releases recently, with the housing starts report followed after.
The housing report looks at how many single family homes were built in July; the previous 6 reports have outperformed expectations for the Loonie.
But the big event comes at 3pm, the UK’s NIESR report looks at growth for the last 3 months to calculate predictions for the month of July. Given that the Bank of England has recently cut growth following the UK’s vote to leave the EU, I am expecting predictions for July to fall from its previous 0.6% forecast. If my predictions are correct, I would not be surprised to see GBPCAD to fall below the 1.70 barrier.
With Brexit likely to be the main driver of exchange rates in the months ahead, keeping in touch with your broker regularly could make a big difference. Why not call our friendly team today to discuss your requirements, client satisfaction remains our number one priority during these periods of uncertainty.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353.
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