By Will Peters

Above: USD/CAD falls back off recent highs following today's data release.

Canadian dollar exchange rates (CAD) are today fighting back after a respite to the relentless selling pressure seen so far in 2014 is offered by a better-than-expected economic reading.

The CAD has clawed back lost ground following news that Canada's Manufacturing Shipments (MoM) (Nov) grew by 1%, analysts had predicted the rate would grow by a mere 0.3%. However, despite the fight-back the currency is still largely worse off than seen at last night's close.

"If the data are in-line or better, the fact that they are second tier should only prompt some modest profit taking in CAD shorts at most," says Stephen Gallo at BMO Capital.

CAD dollar exchange rates today

The pound sterling to Canadian dollar exchange rate (GBP/CAD) is 0.42 pct higher at 1.8067.The euro Canadian dollar rate (EUR/CAD) is 0.08 pct higher at 1.4851.The US dollar to Canadian dollar exchange rate (USD/CAD) is 0.18 pct lower at 1.0967. The rate had actually peaked at 1.1019 in morning trade in London.Note: Our CAD quotes are taken from the wholesale spot markets. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.

Canadian dollar exchange rate action over the past 24 hours

The push above 1.100 in USD/CAD this morning in London felt like a combination of USD strength and CAD weakness occurring simultaneously.

"The trigger seemed to be USD demand throughout the London morning, and the extent to which the market is already short of the CAD has probably acted as a break on CAD weakness a bit. Some participants are probably being cautious about slapping new exposures on ahead of tomorrow and the rest of the week," says Gallo.

Outlook for pound sterling vs Canadian dollar

A strong pound sterling continues to dictate the direction of this rate. Despite the event risk from Canadian manufacturing and wholesale sales data (13:30), it is unlikely that decent figures here will be able to prevent the pound from driving the rate higher.

If Canadian data beats expectations, it could limit the potential upside in GBP/CAD. Nevertheless, "we feel IMF news and UK data to be the main driver of the rate today, and expect levels to remain above 1.80," says Sasha Nugent at Caxton FX.

While Friday’s UK retail sales numbers were much stronger than expected, it is no big surprise that they haven’t led to more sustained GBP gains, as the Q4 retail sales outcome was still only a rise of 0.4%, and there is no necessary implication for Q4 GDP.

Even so, analysts at Lloyds Bank Research still see some value in GBP on a dip vs the likes of the Canadian dollar. "The strength of UK growth and the declining trend in unemployment does suggest the possibility of a steady widening of yield spreads in favour of the GBP," say Lloyds Bank.

There will be interest in today’s CBI industrial trends survey for any indications on the momentum of the economy in January, but the focus will mainly be on tomorrow’s labour market data.

"A dip in the unemployment rate to 7.3% would provide further support to the GBP bull case. We would not expect anything from the MPC minutes to discourage this at this stage," say Lloyds.