Confirmation that the UK services PMI bounced back sharply in March helped the Pound to Canadian Dollar recover ground this morning.
Last Week: Rising Canadian Growth Rate Bolsters Canadian Dollar Exchange Rates
Demand for the Canadian Dollar had picked up in the wake of January’s monthly gross domestic product reading, which exceeded expectations.
As the monthly growth rate rose to a respectable 0.7% at the start of the year this encouraged bets that the Canadian economy has proven more resilient than previously thought.
Even so, as optimism over the UK’s path out of lockdown mounted this limited the downside potential of the GBP/CAD exchange rate.
With markets confident that the UK economy could return to a stronger state of growth over the course of 2021 the Pound remained on a generally positive footing against its rivals.
Three Things to Watch out for This Week
1. Canada Balance of Trade
The mood towards the Canadian Dollar could sour this afternoon with the release of February’s raft of trade figures.
With forecasts pointing towards a narrowing of the headline trade surplus CAD exchange rates may face further selling pressure, given lingering doubts over the strength of the global economic outlook.
2. UK Construction PMI
Investors could find further cause for confidence in the UK economy on Thursday, meanwhile, as long as the construction PMI pushes higher on the month.
While the construction sector only accounts for a small fraction of the UK’s gross domestic product another positive showing here may still encourage hopes of a stronger growth rate to come.
3. Canada Unemployment Rate
If March’s unemployment rate dips as anticipated this may give the Canadian Dollar a solid boost across the board.
Evidence of a recovery within the Canadian labour market could see the GBP/CAD exchange rate knocked off its uptrend ahead of the weekend, even if unemployment remains elevated by historic terms.
GBP/CAD Exchange Rate Outlook
Signs of improvement within the Canadian labour market could limit the potential for Pound to Canadian Dollar exchange rate gains heading into the weekend.