The Pound to Canadian Dollar (GBP/CAD) exchange rate was trending slightly higher in Tuesday’s European session after the Bank of England (BoE) released its latest Financial Stability Review. The Bank of Canada (BoC) will release its own Financial System Review later in North American trading, ahead of some influential figures this week including Gross Domestic Product (GDP) Growth Rate and labour market stats.
In the UK, the Bank of England’s stress test showed banks would be able to withstand a disorderly Brexit, and were strong enough to withstand deep domestic and global recessions, as well as an increase in interest rates to 4.0% and a 27.0% fall in Sterling.
The Bank of England said:
‘For the first time since the Bank of England launched its stress tests in 2014, no bank needs to strengthen its capital position as a result of the stress test. The 2017 stress test shows the UK banking system is resilient to deep simultaneous recessions in the UK and global economies, large falls in asset prices and a separate stress of misconduct costs.’
Markets are likely to spend some time today digesting the news. Additionally, adding to the influx of market developments is the Financial Conduct Authority’s (FCA) release of the Royal Bank of Scotland (RBS) final summary into small business mistreatment, meaning there’s plenty of material for markets to move on.
The Canadian Dollar exchange rate could also experience some movement later in Tuesday’s North American trading with the release of some domestic data. the Canadian Producer Price Index (PPI) for October will be released, as well as Raw Materials Price data. As the session continues, the Bank of Canada will release its Financial System Review, followed by a BoC press conference which could cause significant Loonie exchange rate movement.
The BoC has raised interest rates twice this year and has since utilised a more cautious tone. This is likely to continue in today’s speeches after recent economic data has shown a slowdown that the bank predicted – particularly in areas such as inflation and retail sales. Later in the week, the Canadian Dollar could experience some more significant movement with the release of Canadian Gross Domestic Product (GDP) growth and labour market figures.
Friday’s GDP growth rate stat is forecast to come in at 1.9% in quarter three on an annualised basis, down from the previous 4.5% reading. Additionally, Canada’s Employment Change number is expected to come in at 15K in November, lower than the previous month’s 35.3K. If both of these highly influential ecostats print as forecast or lower, the Canadian Dollar may find itself tumbling against other currency majors.
The Pound to Canadian Dollar (GBP/CAD) exchnage rate is trending at 1.70003.