The latest rise in oil prices was not enough to knock the Pound to Canadian Dollar exchange rate off a positive footing this morning.
Last Week: Stronger UK Growth Data Limits Pound Downside
A better-than-expected UK gross domestic product report helped to shore up the GBP/CAD exchange rate ahead of the weekend.
As the quarterly growth rate clocked in at 1%, defying fears of a potential negative reading, worries over the outlook of the UK economy temporarily diminished.
On the other hand, the mood towards the Canadian Dollar soured in the face of a sharp contraction in December’s wholesale sales figure.
While oil prices picked up in the face of rising tensions in the Middle East and the prospect of increased global oil demand this was not enough to give CAD exchange rates any significant boost.
Three Things to Watch out for This Week
1. UK Inflation Rate
Support for the Pound could fade on Wednesday if the headline UK inflation rate dips from 0.6% to 0.5% on the year as forecast.
A weaker level of inflationary pressure would give the Bank of England (BoE) renewed cause for concern, keeping the possibility of future policy action on the table.
2. Canada Inflation Rate
On the other hand, the Canadian Dollar could strengthen against its rivals on the back of January’s Canadian inflation data.
With inflation expected to pick up to 0.9% on the year, moving steadily closer to the Bank of Canada’s (BOC) target, CAD exchange rates may return to a positive footing once again.
3. Canada ADP Employment Change
However, the appeal of the Canadian Dollar could easily weaken in the wake of the latest ADP employment change figure.
Another negative month in employment growth would add to existing worries over the health of the Canadian economy and labour market, offering the GBP/CAD exchange rate a fresh boost.
Fresh signs of weakness within the Canadian labour market could well help to shore up the Pound to Canadian Dollar exchange rate further this week.