GBP/CAD Weekly Forecast: Pound Canadian Dollar Exchange Rate Slips in Spite of UK Unemployment Rate Dip

A surprise fall in the UK unemployment rate was not enough to keep the Pound to Canadian Dollar exchange rate from shedding ground.

Last Week: Canadian Inflation Miss Offered Boost to Pound Canadian Dollar Exchange Rate

As the Canadian inflation rate failed to pick up as far as forecast this left the Canadian Dollar on a weaker footing against its rivals, especially as the monthly reading dipped.

CAD exchange rates came under further pressure on the back of February’s ADP employment change figure, which showed a surprise plunge of more than 100,000.

With the Canadian labour market showing fresh evidence of weakness there appeared little reason to favour the Canadian Dollar ahead of the weekend.

However, as UK government debt picked up sharply over the course of February this helped to put a dampener on the GBP/CAD exchange rate.

Three Things to Watch out for This Week

1. UK Services PMI

The mood towards the Pound could improve on Wednesday as long as the UK services PMI returns to positive territory as forecast.

As long as the service sector shows growth on the month in March this should ease fears over the possibility of a negative first quarter gross domestic product reading.

2. Canada Manufacturing Sales

Worries over the health of the Canadian economy may pick up once again if February’s manufacturing sales data fails to impress.

Evidence of weakness within the manufacturing sector could leave CAD exchange rates biased to the downside this week, given lingering doubts over the strength of the global trade outlook.

3. UK Retail Sales

Friday’s UK retail sales data may provoke extra volatility for the GBP/CAD exchange rate, meanwhile, as investors look for signs of improved consumer confidence.

A bounce back in retail spending on the month could offer the Pound a solid rallying point, as strong levels of consumer spending have previously helped to shore up economic activity.

GBP/CAD Exchange Rate Outlook

Signs of improved resilience within the UK economy may encourage the Pound to Canadian Dollar exchange rate to recover some of its lost ground over the course of the coming week.

Louisa Heath

Contact Louisa Heath