The Pound to Canadian Dollar exchange rate came under pressure in the wake of a surprise monthly contraction in the UK Nationwide housing price index.
Last Week: Surprise Canadian Growth Uptick Boosts Canadian Dollar
An unexpected uptick in the monthly Canadian gross domestic product helped to shore up the Canadian Dollar ahead of the weekend.
As growth picked up to 0.7% in November this suggests that the Canadian economy experienced a stronger period of growth in the fourth quarter than previously thought.
This encouraged bets that the Bank of Canada (BOC) will refrain from any monetary loosening in the near future as confidence in the economic outlook improved.
Evidence of the UK housing market starting to lose some of its 2020 momentum put pressure on the Pound, meanwhile, leaving the GBP/CAD exchange rate on a weaker footing.
Three Things to Watch out for This Week
- Bank of England Rate Decision
The mood towards the Pound could improve on Thursday, however, in the wake of the Bank of England’s (BoE) February policy announcement.
If policymakers express any particular degree of optimism over the economic outlook this could encourage GBP exchange rates to recover some of their lost ground.
2. Canada Balance of Trade
CAD exchange rates could find some support ahead of the weekend, on the other hand, if December’s balance of trade shows a narrowing of the deficit.
Signs that trade conditions saw any improvement at the end of 2020 could encourage the Canadian Dollar to trend higher against its rivals, even if the balance remains in a state of deficit.
3. Canada Unemployment Rate
Worries over the health of the Canadian economy could easily pick up on the back of January’s unemployment rate, however.
As forecasts point towards the rate rising from 8.8% to 8.9% this may put a dampener on CAD exchange rates, undermining confidence in the wider outlook.
GBP/CAD Outlook
Mixed signals from the Canadian economy may allow the Pound to Canadian Dollar exchange rate room to rally in the days ahead.