The Pound Canadian Dollar (GBP/CAD) exchange rate struggled for direction at the beginning of last week, as Brexit headwinds weighed upon Sterling and uncertainty over central bank policy capped gains for both currencies.
Later in the week, the Pound (GBP) plummeted on a dovish decision from the Bank of England (BoE); the ‘Loonie’ was subdued by weaker-than-expected employment data.
What’s Been Happening: PMI Data Lends Support, Oil Prices Fall
GBP/CAD wavered in a narrow range last Tuesday, as a lack of data left the currencies to trade on external factors.
As the Canadian Dollar (CAD) was supported by hopes of a hawkish Bank of Canada (BoC), news that the UK government were seeking to rewrite parts of the Brexit deal worried GBP investors.
Pound headwinds were countered midweek by strong services data: the UK’s finalised PMI for October was revised up to 59.1. Meanwhile, falling oil prices dented Canadian Dollar (CAD) sentiment.
On Thursday, Canada’s September trade balance surprised to the upside, buoying the ‘Loonie’ along with a recovery in oil prices. Sterling sank as the BoE decided not to hike interest rates and left its quantitative easing programme unchanged.
GBP continued to fall on Friday’s session, accompanied by weakness in the Canadian Dollar as employment change data disappointed and the October Ivey PMI missed estimates.
Into this week, the Pound has recouped some of its BoE-induced losses, supported by risk-on trading and upbeat news regarding trials of a new antiviral pill.
Three Things to Watch Out for This Week
- Central Bank Speeches
Three central bank representatives are due to speak today: one from the BoE and two BoC officials. More speeches follow later in the week.
- UK GDP
The UK’s GDP preliminaries are expected to reveal a slower pace of growth than last month.
- Oil Prices
Oil dynamics are likely to affect CAD trading, with a stronger WTI demand supporting the ‘Loonie’.
Pound Canadian Dollar Forecast
Speeches from central bank officials are likely to influence trading today, alongside external factors such as Brexit developments and oil prices.