The British pound sterling made some gains against the Canadian dollar on the interbank market this week. In part, this is because opposition MPs and rebel Conservatives have voted to oblige Prime Minister Boris Johnson to extend Article 50.
In addition though, the Canadian dollar has fallen, because there have been signs of weakness in Canada’s economy. For example, we learnt this Tuesday that Canada’s factory sector contracted in August, falling to 49.1 according to IHS Markit’s PMI survey. This reflects a worldwide trend, in which the trade war is suppressing countries’ manufacturing industries.
In addition, Canada’s trade deficit unexpectedly rose in value in July, said Statistics Canada this Wednesday, up to -CA$1.12 billion, above forecasts for -CA$0.4 billion. This is because the value of Canada’s exports fell in July, while imports increased.
That said, not all of Canada’s recent economic data has been negative. To start with, Canada’s GDP expanded by +0.2% in June, exceeding economists’ forecasts for slower +0.1% growth, said Statistics Canada last Friday.
In addition, this Wednesday, the Bank of Canada announced that it was holding interest rates steady, at 1.75%. To some extent, this bucks a global trend, in which the Reserve Bank of New Zealand, US Federal Reserve, and European Central Bank have all cut or are planning to in the near future. So these comparatively upbeat economic data may influence the Canadian dollar too, looking ahead.
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