The Pound to Canadian Dollar weakened last week, but was able to limit its losses following the publication of the Bank of England’s (BoE) latest economic forecasts.
What’s Been Happening: Pound Rebounds from Lows on BoE Forecast
The Pound found itself on the defensive through most of last week’s session, undermined by talk of a London lockdown as well as fears that the UK’s strained international relations could hurt the country’s post-Brexit trade opportunities.
However, Sterling was offered some relief on Thursday following the BoE’s latest rate decision.
While the bank made no policy changes, GBP investors welcomed the bank’s latest economic forecasts, as it revised its 2020 growth expectations from –14% to –9.5%.
Meanwhile, the Canadian Dollar found support through much of last week thanks to a sustained uptick in oil prices.
The ‘Loonie’ was also able to strengthen at the very end of the session as Canada’s jobs report revealed a slightly larger-than-expected fall in unemployment last month.
Three Things to Watch Out for This Week
1. UK GDP
The publication of the UK’s latest quarterly GDP estimate is set to act as the main catalyst for the Pound this week, with forecasts for a 20% plunge in growth in the second quarter likely to put some significant pressure on Sterling.
2. Coronavirus Developments
GBP investors will also be focused on the UK’s coronavirus statistics, as any more localised flares up could further postpone the government’s plans to reopen more of the economy.
3. Oil Prices
In the absence of any notable Canadian data releases this week, we are likely to see the ‘Loonie’ remain mostly driven by oil prices, potentially buoying CAD exchange rates if crude continues to strengthen.
The GBP/CAD exchange rate looks vulnerable to further losses this week, as markets brace for the UK ‘s latest GDP figures and confirmation of a record plunge in economic growth in the second quarter.