The Pound Canadian Dollar (GBP/CAD) exchange rate meets last week’s opening levels as oil prices drop for a fourth consecutive day.
Throughout the week, UK data and coronavirus concerns put pressure upon the Pound (GBP), while the Canadian Dollar (CAD) suffered from low oil demand. The Pound has the upper hand this week, as Canada’s headwinds outweigh Sterling’s.
What’s Been Happening: Oil Prices Rebound – CAD Recovery Shortlived
A lack of UK data last week left the Pound open to losses. Tuesday’s rising Covid cases accompanied a fall against the ‘Loonie’ – although Sterling remained strong against several peers.
The GBP/CAD exchange rate was subsequently muted as high oil prices buoyed the Canadian Dollar and UK data disappointed on Thursday.
GBP looked to gain as GDP met expectations: instead, the Pound fell on growth less than pre-pandemic levels. Downside pressure was extended by a contraction in UK industrial production and a £2.5bn trade deficit.
Friday saw the Pound tick back up slightly despite UK Covid deaths increasing, as WTI crude prices fell. Into this week, oil prices have continued to fall, while a snap election contributes toward CAD uncertainty.
Three Things to Watch Out for This Week
- UK Inflation Rate
The UK will publish its latest consumer price index tomorrow, with the Pound potentially facing some headwinds if inflation slowed as expected last month.
- Canadian Inflation Rate
Also being published on Wednesday will be Canada’s own CPI data, which is expected to show inflation rose in July 3.4%, down from 3.6%. This figure is unlikely to alarm and will likely support the Bank of Canada (BoC)’s projections.
- Oil Prices
Continuing to influence CAD exchange rates will be movement in oil prices. If WTI continues to fall, CAD could face some notable pressure.
Pound Canadian Dollar Forecast
Aside from inflation data, retail sales figures from both the UK and Canada may have some impact on trading. UK sales are expected to have risen by 0.5%; Canadian by 4.4% following a 2.1% contraction last month.