The Pound Canadian Dollar (GBP/CAD) exchange rate fell through last week as Canada’s trade balance and jobs data printed above expectations.
Oil prices also increased, buoying the Canadian Dollar (CAD), while the Pound (GBP) suffered on fuel price concerns and other inflationary pressures.
GBP/CAD remains under pressure this week as the UK faces further supply chain difficulties.
What’s Been Happening: Canadian Data Impresses, Pound Subdued by Inflation
The Pound traded in a narrow range against the ‘Loonie’ at the beginning of last week, as both currencies enjoyed tailwinds.
The Canadian Dollar was supported by a greater-than-expected trade surplus, as WTI rose for the sixth day in a row- meanwhile, Tuesday’s UK services PMI was revised higher in September from 54.6 to 55.4.
Midweek, several UK energy suppliers collapsed and wholesale gas prices hit a new all-time high: CAD also faced headwinds in the form of downbeat comments from Iraqi Oil Minister Ihsan Abdul-Jabbar Ismail.
Nevertheless, CAD gained against the Pound despite a slight depreciation in WTI prices.
Closing the week, the ‘Loonie’ climbed higher on upbeat jobs data; in the UK, the Bank of England (BoE)’s Huw Pill warned that the UK is facing a spike in inflation, and French MP Jean-Pierre Pont threatened to revoke the Touquet Treaty.
The Canadian Dollar retained its gains yesterday, as crude oil continued to appreciate- the Pound received some support from hints of an imminent rate hike.
Three Things to Watch Out for This Week
- UK GDP
The UK’s GDP 3-month average is expected to fall slightly tomorrow, potentially denting Pound prospects.
- BoE Speeches
Speeches later in the week from the Bank of England’s Jon Cunliffe and Silvana Tenreyro may influence Pound trading, lifting GBP if a hawkish tone is struck.
- WTI Oil Prices
WTI price dynamics continue to drive movement for the oil-sensitive ‘Loonie’.
Pound Canadian Dollar Forecast
A clutch of UK data in the first half of this week will likely affect the Pound Canadian Dollar exchange rate: UK employment figures are broadly in line with expectations this morning, limiting downside pressure on the Pound.
GDP data tomorrow has potential to influence GBP/CAD; movement in the Canadian Dollar is likely to be driven by oil prices throughout the week.