GBP/CAD Exchange Rate Recovery Limited by Lasting Canadian Dollar Strength
Following bearish performance last week, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is attempting to claw back some ground. The Canadian Dollar (CAD) is being boosted by market sentiment and strong commodity prices however.
Last week saw sharp losses in GBP/CAD. The pair opened the week at the interbank level of 1.77 and spent the week tumbling, ultimately closing around the key interbank level of 1.75.
After touching on a monthly low of 1.74 this morning though, GBP/CAD has been attempting rebound. At the time of writing on Monday, GBP/CAD has gained almost half a cent from the week’s opening level.
Most of this week’s calendar will be fairly quiet. However, Bank of Canada (BoC) news on Wednesday and a slew of key stats on Friday could influence the Pound to Canadian Dollar exchange rate outlook.
Pound (GBP) Exchange Rates Continue to Benefit from Market’s UK Recovery Hopes
While Sterling (GBP) demand was a little mixed last week, the British currency continues to find support from hopes that Britain’s economy will be one of the first to recover from the coronavirus pandemic.
This has kept the Pound strong and is causing a fresh rally attempt today. According to Richard Perry, Analyst at Perry Market Analysis:
‘The perception is that the economy bouncing back with the vaccine (means) there’s less prospect of negative rates,’
On top of continued recovery hopes, the Pound also found some support in today’s comments from Bank of England (BoE) Governor Andrew Bailey.
Bailey also expressed optimism in the UK recovery outlook and indicated that the bank’s job market forecasts could be revised higher thanks to the government’s continued furlough scheme.
Canadian Dollar (CAD) Exchange Rates Supported by Market’s Demand for Commodities
Since last week, investors have been finding the risk and commodity-correlated Canadian Dollar more appealing.
A combination of huge US fiscal stimulus and some stronger than expected US data boosted hopes for US economic recovery from the coronavirus pandemic. This, in turn, boosted market optimism and led to a surge in demand for commodities.
In particular, oil prices have been climbing over the past week due to this and other factors. As oil is Canada’s biggest export, this is helping CAD to trend strongly against the Pound.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Outlook to be Driven by BoC, Data
Much of this week’s economic calendar will be quiet, but there are some noteworthy events on the way which could influence the Pound to Canadian Dollar exchange rate outlook.
Wednesday will see the Bank of Canada (BoC) hold its March policy decision. No changes in policy are expected from the bank, but any changes in signals or comments on Canada’s economic health could be highly influential.
If the BoC is more optimistic about Canada’s recovery potential, or if commodity prices continue to strengthen, the Canadian Dollar could be in for more strength.
A slew of UK and Canadian data, due Friday, will also be closely watched. Surprising UK growth and Canadian job market data could cause a shift in the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook if it surprises investors.