Pound / Canadian dollar exchange rate at 3 year high, forecasts warn of further gains
The pound to Canadian dollar exchange rate (GBP/CAD) continues to power ahead continuing with Tuesday's CAD-negative momentum and forecasters foresee further GBP gains.
In mid-afternoon in London the GBP/CAD rate is trading 0.62 pct lower at 1.7772.
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The Canadian dollar lost almost two cents in yesterday's session, putting the current rate at 3 year highs.
"Yesterday was a terrible day for the loonie with the pound gaining over two cents in just over 24 hours. Canada's trade balance was released yesterday with no change being cited from the -0.9B previously seen, adding speculation that the central bank might cut interest rates," says Sasha Nugent at Caxton FX.
The CAD also suffered defeat when its Ivey PMI figures were released and they aided such heavy movements.
With Novembers figures showing 53.7, a small way into expansion, the prediction was that this growth would continue into December and the predicted number was 55.0.
"Sadly this was wishful thinking and the realised figure was 46.3, which not only showed massive drop in output, it also shows that Canada has fallen back into contraction. Currently trading at 1.7780, this presents an opportune moment for buyers of CAD although higher levels are expected," says Nugent.
USD/CAD in a bull run, forecasting further Canadian dollar losses
Adding further pressure to the GBP/CAD rate is the headline USD/CAD which is adding broad-based pressure on CAD.
"Technically, we think the message is unequivocal; a strong and deeply entrenched bull trend is playing out in USDCAD and the break through the top of the December/January consolidation range in the low 1.07 area puts USD on course of a rally to the low/mid 1.10 area in the next 1-2 months," says Shaun Osborne at TD Securities.
According to Osborne the 1.08 area may be a little sticky in the short-term—1.0804 is the 38.2% retracement resistance derived from the 1.30/0.94 2009/2011 decline and the low/mid 1.08s saw a series of tops on the chart from 2009/2010.
"The underlying trend higher looks very powerful in our opinion, however, so we look for limited corrections (major support now in the low 1.07 area) and for the market to continue grinding higher overall," says Osborne.
Expect further gains in GBP/CAD in sympathy.