As February’s monthly UK gross domestic product reading delivered a positive result this helped to shore up the Pound to Canadian Dollar exchange rate.
Last Week: Falling Canadian Unemployment Boosts Canadian Dollar Exchange Rates
While the UK construction PMI rose to a six-year high of 61.7 in March this was not enough to keep the GBP/CAD exchange rate from shedding ground last week.
As the Canadian trade surplus saw a smaller narrowing in February than forecast this offered a fresh boost to the Canadian Dollar, even in the midst of shifting market sentiment.
The appeal of the Canadian Dollar improved further on Friday with the release of March’s set of labour market data, which saw the unemployment rate unexpectedly drop from 8.2% to 7.5%.
With the labour market showing signs of recovering from its Covid-19 crisis CAD exchange rates found additional room to push higher ahead of the weekend.
Three Things to Watch out for This Week
1. UK Labour Productivity
The fourth quarter’s finalised UK labour productivity reading could put further pressure on the Pound this week.
Confirmation that productivity slumped sharply in the final three months of 2020 may weigh heavily on the GBP/CAD exchange rate, with confidence in the economic outlook still fragile.
2. Canada ADP Employment Change
Confidence in the health of the Canadian labour market could take a blow on Thursday, meanwhile, if the ADP employment change figure shows another negative reading.
Evidence that employment continued to weaken at the end of the first quarter, in spite of a lower unemployment rate, may see the Canadian Dollar trending lower across the board.
3. Canada Manufacturing Sales
Demand for the Canadian Dollar may also weaken in response to February’s manufacturing sales data, with forecasts pointing towards a decline.
A weakening in manufacturing activity could cast a fresh shadow over the outlook of the Canadian economy, offering the GBP/CAD exchange rate a potential leg up.
If fresh signs from the Canadian economy prove less encouraging in nature the Pound to Canadian Dollar exchange rate could hold onto a stronger footing in the near term.