The Pound Canadian Dollar (GBP/CAD) exchange rate fluctuated throughout the week as oil prices rose with Canadian inflation; poor jobs data subdued the ‘Loonie’, but was subsequently overshadowed by upbeat retail sales.
Meanwhile, the Pound (GBP) suffered from waning hopes of a November interest rate hike, but managed to find support at the end of the week on upbeat PMI data.
What’s Been Happening: Inflation Data Drives Exchange Rate
The Canadian Dollar (CAD) sank on Tuesday as oil prices faltered on fears of slowing economic recovery. Weak Chinese GDP data and a decline in US factory output subdued trading sentiment.
Meanwhile, the Pound found support on expectations of a November rate hike from the Bank of England (BoE).
Midweek, the ‘Loonie’ traded in a mixed range as Canadian inflation printed above expectations; the Pound faltered as UK inflation fell, diminishing hopes of an early interest rate hike.
Into Thursday, CAD trended up as high inflation fanned expectations of an early rate hike from the Bank of Canada (BoC). The Canadian Dollar fell in the afternoon, however, as employment data missed forecasts.
On Friday, the Canadian Dollar rebounded on impressive retail sales. UK retail sales plummeted – but GBP managed to recoup losses on better-than-expected PMI data.
Into this week, the ‘Loonie’ trends up as oil prices hit a new seven-year high. WTI crude climbed above $85 per barrel yesterday, as GBP took a hit from dovish BoE comments.
Three Things to Watch Out for This Week
- UK Autumn Budget
Wednesday’s Autumn budget is expected to reveal a public sector pay rise, alongside investment in education and the NHS.
- BoC Interest Rate Decision
Canada’s central bank may assume a hawkish tone given last week’s high inflation.
- Canadian GDP
Friday’s GDP is expected to reveal expansion in the month of August.
Pound Canadian Dollar Forecast
GBP/CAD is likely to be influenced this week by UK budget data, alongside various high-impact releases from the Bank of Canada. Oil prices are also likely to drive movement in the exchange rate, alongside various external factors such as Brexit talks and the spread of coronavirus.