Pound Canadian Dollar Exchange Rate Recovers from Lows Ahead of Key Canadian Retail Report

Pound Canadian Dollar Exchange Rate Benefits from Dampened Risk-Appetite 

After weeks of strong performance, the Canadian Dollar (CAD) has slipped this week and the Pound Canadian Dollar (GBP/CAD) exchange rate has recovered from its worst levels. Upcoming Canadian retail data could boost the ‘Loonie’ again though. 

Since opening this week at the interbank level of 1.73, GBP/CAD has largely trended with a downside bias. Earlier in the week, GBP/CAD even touched on a low of 1.72, its worst levels since January. 

GBP/CAD recovered slightly from lows in the past few days though. At the time of writing on Friday morning, GBP/CAD is trending just above the week’s opening levels again as the Pound (GBP) benefits from Canadian Dollar weakness. 

This afternoon’s Canadian retail sales stats are the biggest focus for now. Looking ahead, UK job and PMI data will likely mean the Pound drives Pound to Canadian Dollar exchange rate movement next week. 

Pound (GBP) Exchange Rates Firm as UK Data Beats Forecasts 

Following a cautiously optimistic Bank of England (BoE) policy decision yesterday, the Pound remains appealing. Rather than selling it from highs following its recent strong rally, the Pound has found support that is helping it to avoid bigger losses. 

This morning’s UK data has beaten forecasts, helping it to remain supported. UK consumer confidence results from GfK and public borrowing figures both beat expectations. 

Speaking on the UK confidence report, GfK which publishes the report said: 

‘Spring is in the air on the back of well-received budget announcements, the successful vaccine roll-out and roadmaps in place for ending lockdown. 

The scores looking ahead one year are recovering especially well… If this improved mood translates into spending, it might help reverse some of the economic damage the UK has suffered.’ 

Canadian Dollar (CAD) Exchange Rates Weighed by Market Sentiment 

A combination of factors weighed on the Canadian Dollar this week, causing investors to sell the currency back from its best levels. 

The Canadian Dollar is a risk and trade-correlated currency. It has been less appealing due to tumbling prices in oil, Canada’s biggest export, as well as rising bond yields. 

On top of this, yesterday’s Canadian employment change data from ADP fell short of expectations, with an employment change of –100k. According to Nela Richardson, Chief Economist at ADP: 

‘The decrease in jobs was led by leisure and hospitality, trade, and construction, while the manufacturing and finance sectors recorded slight job gains, 

As lockdown restrictions continue to ease across the country, hard-hit industries such as leisure and hospitality will begin to see gains in hiring.’ 

Pound Canadian Dollar (GBP/CAD) Exchange Rate to Focus on UK Data Next Week 

For now, GBP/CAD investors are awaiting this afternoon’s Canadian retail sales results from January. A highly influential report, if the data is strong it could boost Canadian Dollar demand before markets close for the week. 

Next week’s Canadian economic calendar will be quieter though. The Canadian Dollar will be driven more by shifts in market sentiment and movement in rivals, including the Pound. 

Many notable UK ecostats are due for publication next week. If these stats give investors a better idea of how Britain’s economy is weathering the coronavirus pandemic, it could have a big impact on the Pound’s movement. 

UK job market data will be published on Tuesday. This will be followed by UK inflation data and PMI projections on Wednesday. 

Friday will round out the week with UK retail sales results. Overall, slews of UK data next week could leave the Pound Canadian Dollar (GBP/CAD) exchange rate driven by Sterling. 

Josh Jeffery

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