The exchange rate of the British pound against the Canadian dollar (GBP / CAD) is stuck in a narrow range so far today, with the pair trading at around C $ 1.7174.
Pound sterling (GBP) exchange rates moderate as UK GDP is revised down
The British pound (GBP) is struggling to find a strong directional bias this morning, following the release of the latest UK GDP figures.
According to final figures released by the Office for National Statistics (ONS), domestic growth in the third quarter was revised down from 1.3% to 1.1%. Today’s release also saw revised second quarter growth down from 5.5% to 5.4%.
Darren Morgan, Director of Economic Statistics Development at ONS, commented: “Our revised figures show UK GDP recovered a bit slower in the third quarter, with much weaker performance from health and hairdressers throughout the quarter, and the energy sector contracts more in September than we previously estimated.
The ONS also reported that weak trade weighed on growth, limiting the impact of a stronger-than-expected rebound in consumer spending as more businesses were able to reopen over the summer.
Most worrying for GBP investors, however, is that the UK economy was already showing signs of slowing even when economic activity was freed up by the complete lifting of Covid restrictions.
This could bode ill for growth in the last quarter of 2021 where the emergence of the Omicron Covid variant and the reimposition of some restrictions as part of the government’s Plan B measures.
Bethany Beckett, UK economist at Capital Economics, said: “Today’s post indicates that the economy had a little less momentum in the third quarter than we previously thought. signs that the Omicron variant has affected business, growth will certainly have slowed further in the fourth quarter. ‘
The low GDP release offsets some of the optimism that supported the pound yesterday after Prime Minister Boris Johnson confirmed the government will not impose further Covid restrictions this side of Christmas.
Canadian dollar (CAD) exchange rates stagnate as oil rally falters
At the same time, the Canadian dollar (CAD) is mostly in a range this morning as the recent rebound in oil prices appears to be running out of steam.
WTI crude prices currently sit around $ 71 a barrel after rebounding from around $ 68 a barrel earlier in the week.
However, despite concerns about the tight supply, the imposition of new Covid restrictions in Europe and other parts of the world continues to undermine demand forecasts.
Many investors fear that prices will continue to fall into early 2022, as this drop in demand will coincide with the Organization of the Petroleum Exporting Countries (OPEC) plans for its members to start ramping up production in January.
GBP / CAD exchange rate forecast: Canadian GDP surge to boost the “Loonie”?
Looking ahead, the exchange rate of the British pound against the Canadian dollar (GBP / CAD) may come under pressure tomorrow with the release of Canada’s own GDP figures.
Canada’s latest monthly figures should point to a solid rebound in economic activity in October, with growth picking up 0.1% to 0.8%.
Meanwhile, GBP investors are likely to focus on Covid developments in the UK, as another huge increase in daily cases will add to speculation the government will impose a ‘breaker’ lockdown after Christmas.
However, as trade becomes increasingly scarce before the holiday season, any movement in the GBP / CAD exchange rate may prove to be limited.