Retail Sales Recovery Triggers 0.5% Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rise

Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rises as Retail Sales Stats Beat Forecasts

The Pound to Canadian Dollar exchange rate (GBP/CAD) dipped on Wednesday’s trading session, but has since risen by 0.5% thanks to UK retail sales data for April.

The readings have shown levels of sales rise by more than expected during April, on the month and the year with and without fuel sales included.

While the GBP/CAD exchange rate has clearly been supported by the data, economists have given a more mixed reaction to the news.

Rob Kent-Smith of the Office for National Statistics (ONS) has said:

‘Retail sales bounced back in April, as petrol and other sales recovered from the snowfall. But the underlying position remains subdued with the volume of goods sold over the last six months broadly unchanged.

‘Over the longer-term, retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing.’

Taking a more definitively cautious stance, Samuel Tombs of Pantheon Macroeconomics said:

‘We continue to expect retail spending to increase only at a glacial rate this year. Consumers' confidence has weakened and savings intentions have picked up.

‘The sharp rise in oil prices to nearly $80 will filter through to petrol pumps over the next three weeks, hitting petrol sales volumes and squeezing the amount of money households have left for discretionary consumption.’

Looking ahead, the Pound may fall against the Canadian Dollar on Friday morning when UK GDP and business investment data is released.

Current forecasts are for GDP growth and business investment levels to have fallen in Q1 2018; such results may trigger a rapid reversal in trading and cause a GBP/CAD exchange rate drop.

Canadian Dollar to Pound Exchange Rate Slides as Pipeline Pressure and US Dollar Concerns Lower Confidence

Today has been one to forget for Canadian Dollar traders, with the CAD falling against all of its regular peers due to unfavourable conditions.

This deterioration is due to a range of factors, not least the suggestion that the US Federal Reserve could hike interest rates as early as next month.

US interest rate hikes often result in the US Dollar rising in value, which in turn can push down currencies like the Canadian Dollar.

Another problem for the Canadian economy is that due to shipping and pipeline issues, Canada is unable to fully capitalise on the sudden surge in crude oil prices.

BMO Chief Economist Doug Porter has considered the issue, stating:

‘If producers can’t benefit because of pipeline constraints and meanwhile consumers are being subjected to the full bore of oil prices, then overall I think you could argue that rising oil prices might be a little bit contractionary for the Canadian economy.’

Looking ahead, the Canadian Dollar could be affected by Friday afternoon’s budget balance reading for March.

This is predicted to show a reduction of the existing budgetary surplus, so might result in the Canadian Dollar making further losses against the Pound before the weekend.