The Pound Canadian Dollar (GBP/CAD) exchange rate climbed over the course of last week, although rising oil prices capped the Pound (GBP)’s gains. While Covid optimism helped buoy the Canadian Dollar (CAD), the Pound held the upper hand as US Dollar downside supported Sterling.
The Pound has fallen against CAD this morning, however, as crude oil prices tick up and Canada’s GDP growth rate looks set to rise. Meanwhile, the Bank of England’s consumer credit data has contracted unexpectedly.
What’s Been Happening: Pound Firms on USD Weakness; Oil Prices Drive Movement
The Pound struggled to lift initially last week, as worrying UK supply chain data left the British public in a state of panic.
GBP subsequently rose despite mixed data, as crude oil prices dipped and a reduced PPI for the month of July exacerbated the Canadian Dollar’s downside.
Towards the end of the week, US Dollar weakness in the run-up to Federal Reserve Chairman Jerome Powell’s speech on Friday drew support away from the safe-haven currency – to the benefit of the Pound.
Into today’s session, the Pound is trending back down as rising oil prices overshadow USD weakness. Poor UK data contributes to weakening GBP sentiment: consumer credit has contracted alongside mortgage lending for July.
Three Things to Watch Out for This Week
- Canadian Balance of Trade
Thursday will see July’s balance of trade – expected to report a C$1.4B surplus. This could boost CAD alongside strong GDP figures.
- PMI Data
The UK prints its final PMI figures this week, alongside Canada’s manufacturing PMI on Wednesday. Both currencies are forecast to reveal slowing growth.
- Oil Prices
As ever, the movements of CAD are primarily directed by crude oil prices. The commodity-linked ‘Loonie’ may continue to see gains this week if oil prices sustain.
Pound Canadian Dollar Forecast
UK data looks to print poorly in the week ahead, potentially exposing the Pound to headwinds.
Meanwhile, Canadian data is expected to print mixed. CAD has additional support from rising oil prices; although this support could easily turn to a headwind if crude prices slide.