The Pound Canadian Dollar exchange rate held steady this morning following the release of the Bank of England’s (BoE) Financial Stability Report (FSR).
The BoE’s report revealed that there were still risks to the nation’s economic recovery stating that households and businesses are ‘likely to need continuing support from the financial system as the economy recovers’.
What’s Been Happening: Pound Rises as Fluctuating Oil Markets Weigh on ‘Loonie’
The Pound Canadian Dollar rose last week as WTI crude oil prices fluctuated around $75 a barrel as markets weighed up the threat of the Delta Covid-19 variant throughout Europe, the United States and Asia-Pacific.
Rystad Energy analyst Louise Dickson explains:
‘Traders are now refocusing on the spread of the COVID-19 pandemic and global concerns over the new variants’ expansion are weighing on prices, despite tightening oil supplies globally.’
Last week also saw the release of the Bank of Canada’s (BoC) business outlook survey report for summer. The BoC remarked upon the ‘broadening recovery ahead’ as business sentiment improves and markets have forecast that oil prices will tick-up.
The Pound rose against the commodity-linked ‘Loonie’, however, as uncertain oil markets and growing hopes for the UK economy favoured Sterling strength.
With the UK heading towards lifting lockdown restrictions on July 19, the Pound pushed higher against the Canadian Dollar, trading around highs of CA$1.73 later in the week.
Three Things to Watch Out for This
- UK Unemployment and Inflation Data
This week will see the release of the latest UK jobless report and latest inflation report for June. Could an improvement in the outlook for the UK economy and jobs sector see the Pound head higher against the ‘Loonie’?
- UK Covid-19 Developments
We could see the GBP/CAD exchange rate head higher this week if Downing Street is increasingly optimistic about lifting lockdown restrictions on July 19. Any signs of caution or hesitation around rising cases of the virus could begin to limit Sterling.
- Bank of Canada Interest Rate Decision
Wednesday will see the Bank of Canada (BoC) announce its latest interest rate decision, which is expected to hold at 0.25%. However, could bullish monetary policy see the Canadian Dollar head higher?
Pound Canadian Dollar Forecast
The GBP/CAD exchange rate could head higher this week if confidence in the UK economy continues to grow ahead of the lifting of lockdown measures next week.