The latest Canadian Unemployment data was released this afternoon and it was not good news with the national jobless rate rising to 5.9%. The expectation was for an increase, but only of 0.1%, not the 0.2% announced. This means that in January the Canadian economy lost 88,000 jobs, a significant difference from the previous data, released in November and December last year, over that period there was an increase of 145,000 jobs and followed a sustained period of growth in employment.
What does this mean for GBP/CAD exchange rates?
This time last month the level plummeted several points which sparked a frenzy of Canadian Dollar strength with the rate jumping back up. However this was short lived, in the last 30 days the GBP/CAD rate has climbed 8 cent taking the level above the 1.76 rate.
The Canadian Dollar has been on a 5 month demise against Sterling with the rate progressively increasing from the low of 1.586. There is certainly an argument that the rate will continue to climb moving forwards especially as the pre referendum in 2016 saw the rate above the 2.00. Since that point the GBP/CAD is back at post referendum highs and there is the potential for a return to recently unprecedented level.
Interest rate changes?
Generally, the latest data for the Canadian economy has shown signs that there is growth however it might not be enough to spark the Bank of Canada to increase interest rates. Last year there was two surprise hikes and the markets could well be anticipating such a move if we see a large amount of positive economic news.
If the US continue to raise interest rates this year then the Canadian central bank may be encouraged to do the same, to keep investment opportunity in line with their main economic partner. Either way a few interest rate hikes may not be enough to prevent the GBP/CAD exchange rate continue on its climb.