A surprise dip in February’s UK unemployment rate was not enough to keep the Pound to Canadian Dollar exchange rate from shedding some ground this morning.
Last Week: Slump in Canadian Manufacturing Sales Support Pound Canadian Dollar Exchange Rate
In the wake of February’s underwhelming UK gross domestic product report the mood towards the Pound proved generally muted.
Even so, the GBP/CAD exchange rate found support ahead of the weekend as the latest Canadian manufacturing sales figure fell short of forecast.
As sales showed a deeper contraction on the month than anticipated this cast fresh doubt over the strength of the manufacturing sector, exposing the Canadian Dollar to fresh selling pressure.
While March’s ADP employment change showed a sharp increase on the month this failed to offer CAD exchange rates any rallying point on Thursday.
Three Things to Watch out for This Week
1. UK Inflation Rate
With forecasts pointing towards a moderate uptick in the monthly UK inflation rate the Pound could find fresh support against its rivals on Wednesday.
Although the Bank of England (BoE) looks set to maintain a dovish policy outlook for the foreseeable future signs of rising inflationary pressure could still offer GBP exchange rates a boost.
2. Canada Inflation Rate
As markets expect to see the Canadian inflation rate pick up sharply on the year in March CAD exchange rates may experience a boost.
Higher levels of inflation would give the Bank of Canada (BOC) less cause for caution in the near term, even though no interest rate hike looks likely for some time to come.
3. UK Retail Sales
Confidence in the underlying health of the UK economy may well improve on Friday with the release of March’s retail sales data.
As long as consumer spending shows signs of picking up, even before the recent easing in national lockdown conditions, the GBP/CAD exchange rate could return to an uptrend.
Increasing signs of resilience within the UK economy could encourage the Pound to Canadian Dollar exchange rate to push higher over the course of the week.