An unexpectedly sharp recovery in UK new car sales was not quite enough to boost the Pound to Canadian Dollar exchange rate this morning.
Last Week: Narrowed Canadian Budget Deficit Shored up Canadian Dollar Demand
While February’s monthly Canadian gross domestic product reading proved weaker than forecast this failed to put any particular dampener on the Canadian Dollar ahead of the weekend.
As the growth rate remained in positive territory at 0.4% this encouraged investors to maintain an optimistic view of the economic outlook.
A sharp narrowing of the Canadian budget deficit also helped to drag the GBP/CAD exchange rate down on Friday.
Although the Nationwide house price index showed solid growth in April, pointing towards a resilient housing market, this failed to give the Pound any boost against its rivals.
Three Things to Watch out for This Week
1. Bank of England Interest Rate Decision
Support for the Pound could founder further on Thursday if the Bank of England (BoE) shows continued signs of dovishness at its May policy meeting.
Although no change in monetary policy looks likely at this stage the GBP/CAD exchange rate could shed fresh ground if the central bank signals its willingness to remain on hold for longer.
2. Canada Unemployment Rate
Confidence in the health of the Canadian economy could take a blow on Friday, meanwhile, with April’s unemployment rate forecast to pick up.
If the unemployment rate rises from 7.5% to 7.8% as anticipated this may give investors cause for pause, with a weakening labour market likely to drag on economic activity in the second quarter.
3. Canada Ivey PMI
On the other hand, another strong performance from the latest Ivey PMI could help to encourage greater optimism.
As long as the index remains firmly planted in expansion territory the Canadian Dollar could push higher across the board, even in the wake of any disappointing labour market data.
Fresh signs of BoE dovishness and any evidence of sustained Canadian economic growth may see the Pound to Canadian Dollar shedding further ground this week.