The Pound Canadian Dollar (GBP/CAD) exchange rate traded in a wide range last week, as oil prices fluctuate and risk sentiment varied.
What’s Been Happening: GBP Sentiment Wanes, Oil Prices Dip
GBP/CAD fluctuated following the UK’s bank holiday weekend, little changed on rates of the week previous.
The Pound (GBP) then fell against the majority of its peers as UK consumer credit data printed poorly; but recouped some of its losses against CAD on Wednesday, as OPEC agreed to release 400K barrels of oil per day to the market. An increase in oil supply dents WTI prospects as demand is expected to reduce.
Towards the end of last week, WTI crude managed to appreciate, buoying the Canadian Dollar (CAD): the Pound saw losses of its own as concerns over Brexit and Covid vaccines depressed GBP sentiment.
The Pound fell further against the ‘Loonie’ yesterday afternoon, but is climbing back up despite a lift in WTI prices, as specialists are confident that the UK’s economic recovery will withstand an autumn rise in coronavirus cases.
Three Things to Watch Out for This Week
- Bank of Canada (BoC) Interest Rate Decision
The Bank of Canada is not expected to alter interest rates from their current 0.25% – but investors will be on the alert for fresh forward guidance.
- UK GDP
The UK’s latest GDP figures are expected to report a slowing of growth in the three months to July, potentially placing pressure on the Pound later this week.
- Canadian Employment Change
Employment change data could elevate the ‘Loonie’ if 100K new jobs were created in August, as forecast.
Pound Canadian Dollar Forecast
Oil prices are invariably a driver of GBP/CAD exchange rate dynamics – if WTI pushes back up towards $70 per barrel, the Canadian Dollar may climb.
Conversely, if GBP sentiment remains strong on Covid optimism, the Pound could see gains of its own. The Brexit situation will likely affect markets, along with news of a possible tax rise.