Pound Canadian Dollar (GBP/CAD) Exchange Rate Hits 9-Day Low, Rebounds on Oil Price Drop

The Pound Canadian Dollar (GBP/CAD) tumbled last week as Pound sentiment was subdued by supply chain concerns and dovish Bank of England (BoE) comments.

At the week’s close, however, the Pound Canadian Dollar exchange rate soared as oil prices plummeted and risk aversion gripped markets. GBP/CAD continues to climb into today’s session.

What’s Been Happening: Oil Prices Drive CAD, Pound Drops on Brexit Concerns, Inflation

The Pound (GBP) struggled at the beginning of last week as dovish BoE comments weighed upon sentiment and Tuesday’s PMI release highlighted supply chain issues and high business costs. GBP/CAD climbed despite a lack of Canadian data.

The Canadian Dollar (CAD) experienced some upside midweek, as WTI prices climbed – oil supply concerns faded as the US and other major countries released less reserves than initially expected.

On Thursday, GBP came under fresh pressure from fresh UK-EU headwinds: Prime Minister Boris Johnson renewed threats to trigger article 16.

However, the Pound Canadian Dollar exchange rate trended up at the end of the week as a new Covid variant was detected in South Africa. Risk aversion gripped markets and oil prices plunged on worries over reduced demand.

GBP/CAD fell on Monday as investors corrected last week’s steep uptick – the exchange rate is on the rise again today though, as CA GDP data is awaited.

Three Things to Watch Out for This Week

  1. Canadian GDP

Canadian GDP growth is expected to rise on a quarterly basis, but drop for the month of September. A mixed release could exert CAD downside.

  1. BoE Speeches

The Bank of England Governor Andrew Bailey is due to speak midweek, followed by Michael Saunders on Friday. Dovish comments may suppress Sterling sentiment.

  1. Canadian Employment Data

Canadian unemployment looks to have fallen slightly in November, with more people in jobs. If this is confirmed on Friday, the ‘Loonie’ will likely receive support.

Pound Canadian Dollar Forecast

Also directing GBP/CAD movement this week will be external factors such as Brexit negotiations and oil prices. Now that markets are recovering from the shock of the Omicron discovery, oil prices may resume their climb, buoying the Canadian Dollar.

Olivia Evershed

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