Canadian Dollar Forecast: Has GBP/CAD Exchange Rate Hit a Top?

At the time of writing we see the pair trading unchanged at on last night's close having reached 1.8250.

The US dollar to Canadian dollar is meanwhile 0.14 pct lower at 1.0854.

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Forecast for the pound to Canadian dollar exchange rate

The rally in GBP/CAD that took us into 2014 appears to have topped out, and sideways action is likely to be the theme going forward.

According to Shaun Osborne at TD Securities the longer-term picture should ultimately favour the GBP:

"Over the past week, GBPCAD has made a little more progress towards the upper end of the broader trading range in place since the start of the year but the overall feeling of consolidation remains intact.

"The GBP rally has stalled at the 40-day MA and the market has not developed any significant bullish momentum over the past week. There is a risk that the GBP slips back somewhat in the short-run but we generally feel that losses are likely to remain limited. We expect firm support near 1.82. Broadly, we are sticking with out long-term call for 1.92."

Why is the Canadian dollar rate higher this week?

Things started going right for the CAD this week when it was boosted by housing starts which increased by 0.8% to 198,300 annualised units in May 2014, thereby surprising market expectations for a decline to 185,000 in the month.

The increase in homebuilding activity reflected acceleration in urban single-unit starts (5.4%) while the pace of urban multiple-unit starts (-0.8%) and rural starts (-3.8%) slowed in the month.

"Canadian homebuilding activity is rebounding smartly in the second quarter of 2014 as seasonable weather enticed builders to break ground once again after a sharp slowing in new home construction earlier this year, which was hampered by extreme winter weather," says a note from RBC Capital in the wake of the data release.

Markets today: Will Wall Street Break Record Levels?

Heading into the US session, the futures are indicating that Wall Street is set to open flat after closing at a record high level once again on Friday.

"Trading just below the key 17,000 level, investors may continue pushing the bullish run towards this milestone level however some resistance should be expected as it gets closer. On Friday, the index was helped along by a better than expected payroll report in May which came in at 217k rather than the forecasted figure of 214k," says Sam Fox at Spreadex.
 
With a very thin economic calendar for the day, the direction of US markets may be catalyst for further movement around the globe.