The Pound to Canadian Dollar exchange rate was met by volatility last week amidst fluctuating market sentiment and oil prices.
What’s Been Happening: Souring Market Sentiment Rocks Sterling
The Pound traded in a wide range against the Canadian Dollar last week in response to fluctuating market sentiment.
Sterling proved particularly vulnerable to these shifts in sentiment amidst growing Brexit uncertainty and concerns over the UK government’s handling of the coronavirus crisis.
The GBP/CAD exchange rate was also left exposed to losses at the end of the session after the UK reported a startling 20.4% plunge in GDP in April.
Meanwhile, the value of Canadian Dollar was tied closely to that of oil last week, with the commodity-linked ‘Loonie’ being infused with volatility as crude prices fluctuated amidst fears a second wave of coronavirus infections could negatively impact demand.
Three Things to Watch Out for This Week
1. BoE Rate Decision
For GBP investors the focus this week will be on the Bank of England (BoE) as it delivers its latest policy decision. An expansion of its stimulus programme looks almost guaranteed, but will the BoE make any mention of negative interest rates?
2. UK Retail Sales
Also influencing the Pound will be the publication of the UK’s latest retail sales figures. Economists are predicting a rebound in sales growth last month which may go some way towards boosting Sterling sentiment.
3. Canadian Inflation
For CAD investors the spotlight this week will be on Canada’s consumer price index. Will inflation have picked up again in Canada in May, or will the country have suffered another month of deflation?
With the BoE’s latest rate decision and Canada’s CPI figures on the agenda, it seems safe to assume the GBP/CAD exchange rate faces additional volatility this week.