GBP/CAD rates have spiked over the past week, with Sterling benefitting from improved run of UK economic data. The Pound gained some traction last week following strong Manufacturing & Construction figures, along with positive Services data. This has led investors to believe that we may not avoid the recession many through the UK would fall into around the turn of the year and this in turn may cause the Bank of England (BoE) to reconsider a further interest rate cut. Whilst it is unlikely that Sterling’s value will soar against the CAD whilst the UK continues to remain in a state of economic limbo, it is likely that the Pound has now found a foothold in the market.
This trend was reinforced following today’s official Canadian Unemployment figure, which came out worse than expected at 7%. This followed Wednesday’s Band of Canada (BoC) interest rate decision and subsequent monetary statement. Whilst rates were kept on hold at 0.5% the subsequent statement was cautious, with recent growth forecast shrinking on previous estimates.
Whilst the current market sentiment is leaning towards a slight Sterling improvement, the current uncertainty that has engulfed the UK economy is unlikely to be lifted anytime soon. Therefore, I would be looking to take advantage of Sterling’s recent gains and avoid what has become an increasingly volatile and uncertain market.
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