The Pound Canadian Dollar (GBP/CAD) exchange rate has fallen to a six-day low today as the Canadian Dollar (CAD) benefits from rebounding oil prices.
What’s Been Happening: UK Data Prints Poor; Oil Prices Drive Movement
The Pound sank a little at the start of last week as UK employment data disappointed. While the number of those in work rose by more than expected, the number claiming benefits remained high and wage growth was deemed unrepresentative.
On Wednesday, however, oil prices fell – forcing the Canadian Dollar down and reversing the trend.
Despite positive inflation and employment data, the commodity-linked ‘Loonie’ remained muted until Friday, when UK Covid fears pressurised the Pound and subsequently gave CAD an opportunity to recover its losses.
The Pound has continued to fall into this week, as crude prices trend up and UK data prints mixed. Yesterday’s services PMI missed forecasts and manufacturing edged down to 60.1 from 60.4 last month.
Three Things to Watch Out for This Week
1. UK CBI Distributive Trades
Today’s distributive trades survey for the month of August is expected to show a decline in retail sales volumes. If it prints as expected, the Pound may face headwinds.
2. Oil Prices
Movement in the oil-sensitive Canadian Dollar is largely directed by WTI price dynamics. If oil prices continue to stabilise, CAD could find further support.
Coronavirus is a consistent driver of currency movements, stimulating a risk-off mood when countries report a surge in infections. If cases escalate in the UK or Canada, the affected country will have its currency prospects dented.
Pound Canadian Dollar Forecast
Given a lack of significant data for the upcoming week, movement in the GBP/CAD exchange rate is likely to be driven predominantly by oil prices and coronavirus developments.
Any political developments may also influence GBP/CAD direction.