The Pound Canadian Dollar (GBP/CAD) exchange rate fell over the course of last week as oil prices rose, lifting the ‘Loonie’.
Meanwhile, the Pound (GBP) suffered as gas prices dented trading sentiment and Prime Minister Boris Johnson announced that a free trade agreement with America was a long way off.
What’s Been Happening: WTI prices soar, GBP Falls on Gas Price Headwinds
UK gas costs dented GBP sentiment at the beginning of last week: prices escalated from around £40 per therm over the past decade to £162 per therm in recent weeks.
Into Tuesday, Sterling firmed slightly against the Canadian Dollar (CAD) as two factories reopened which had previously closed due to gas price pressures.
Midweek, CAD resumed its uptrend as oil prices revived. In the UK, Boris Johnson revealed that a UK-US free trade agreement is unlikely before the next election.
On Thursday, the ‘Loonie’ reversed a four-week high against GBP, despite WTI appreciation and positive Canadian retail data. Hawkish signals from the Bank of England (BoE)’s Monetary Policy Committee led to ultimate GBP upside.
The Pound gained against several peers on Friday as city traders brought forward their rate hike forecast. CAD also trended up as the US Energy Information Administration (EIA) reported a fall in crude inventories.
On Monday this week, the Canadian Dollar firmed as WTI extended a five-week uptrend. The Pound also rose as GBP sentiment was sustained by BoE tailwinds.
Three Things to Watch Out for This Week
- BoE Consumer Credit
Consumer credit is expected to rise by £0.3bn for the month of August, potentially inspiring GBP tailwinds.
- Canadian GDP
Forecasts predict a fall in CA GDP for the month of July, which could dent CAD sentiment.
- Canadian Manufacturing PMI
September’s manufacturing PMI looks to print below last month, threatening Canadian Dollar downside.
Pound Canadian Dollar Forecast
The main driver for the ‘Loonie’ is likely to be oil prices – if WTI continues to appreciate, CAD may climb higher.
Meanwhile the Pound faces headwinds: if European drivers fail to take up the government’s short-term visa offer, the UK’s transport shortfall may worsen, depressing the Pound Canadian Dollar exchange rate.