Exchange Rate: Dollar to British Pound Slips Despite Strong UK Housing Data

The pound (GBP) has come under pressure in recent days as optimism surrounding UK house prices fails to overcome risk-off headwinds. According to Doug Porter, chief economist at BMO Capital Markets, 'I think the big picture here is the economy is struggling to grow, but it is keeping its head just above recession.' Despite strong housing data, the pound (GBP) has slid due to concerns about the economy's growth prospects.

The surprise economic contraction revealed last week for Q3 has triggered alarm bells among traders. Although the economy avoided a recession, the decline marked the first since the second quarter of 2021, sparking mixed assessments from economists. The bank acknowledged risks to inflation, but investors are more concerned about threats to economic growth.

A recent upswing in oil prices is a positive sign for Canada's economy due to its crude-linked nature. However, this approach has parallel cooling effects on the Canadian labor market while rent and housing costs remain elevated.

The Bank of Canada gave its reason for holding interest rates at 5% as the success of restrictive monetary policy in bringing down price pressures: 'With further signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank's balance sheet.' The Canadian dollar (CAD) slumped against its peers as traders analyzed the Bank of Canada's decision.

The pound-Canadian dollar (GBP/CAD) exchange rate traded widely on Thursday as investors mulled over the Bank of Canada's interest rate decision while UK house-price tailwinds were countered by bearish sentiment. At the time of writing, GBP/CAD is trading at C$1.7109, virtually unchanged from yesterday.

Exchange rate dollar to british pound