GBP/CAD Weekly Forecast: Pound Canadian Dollar Exchange Rate Mixed as UK Government Spending Falls

The Pound to Canadian Dollar (GBP/CAD) exchange rate has been mixed since markets opened this morning. Government spending in the UK fell to £23.4 billion as much of the economy reopened during May.

However, investors remain cautious surrounding Sterling following the four-week lockdown extension announced at the start of last week.

The Canadian Dollar had found itself limited this morning in absence of any notable economic data from Canada.

Last Week: Sterling Volatile as Canadian Dollar Firmed on Rising Oil Prices

The Pound was trading in a mixed range against the Canadian Dollar last week as concerns over the UK’s four-week lockdown extension worried investors.

However, throughout the week a broad weakness in the Canadian Dollar as a result of a hawkish federal reserve and cautious market mood, paired with a slew of positive economic data from the UK bolstered Sterling in the latter half of the week.

The GBP/CAD pairing ended the week trading in a mixed range as worse-than-expected retail sales figures from the UK and rising oil prices caused the ‘Loonie’ to limit any major losses.

Three Things to Watch for This Week

  1. Coronavirus Developments

Following the announcement from UK Prime Minister Boris Johnson last week that lockdown restrictions will remain in place until at least July 19th in England, investors will be keeping an eye on any further developments surrounding the coronavirus pandemic.

  • BoE Interest Rate Decision

Pound investors will be looking towards Thursday’s Bank of England (BoE) interest rate decision. Whilst interest rates are expected to hold at 0.1%, a more hawkish stance from the bank would add further support to Sterling.

  • Canadian Retail Sales

Tomorrow will see the release of the most recent Canadian retails sales figures for April which are forecast to have fallen -5.1%, if the figure meets forecasts then the Canadian Dollar could suffer  as a result.

GBP/CAD Outlook

This week’s busier economic calendar for the UK will see movement driven by the BoE interest rate decision along with Market PMI data. A quieter week for the Canadian Dollar will see investors keeping an eye on the global market mood in the coming days along with retail sales data tomorrow.

Georgina Clissold

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