The Pound Canadian Dollar (GBP/CAD) exchange rate wavered throughout the course of last week as uncertainty over fuel demand pressured CAD; the Pound traded in a mixed range on Brexit headwinds, poor UK data and vaccine developments.
What’s Been Happening: Omicron Fears Grip Markets, UK Data Disappoints
The Pound Canadian Dollar exchange rate fell on Tuesday as Pound sentiment was subdued by tensions over the migrant crisis: various officials blame Brexit for the current situation.
Meanwhile, the Canadian Dollar came under pressure as WTI prices fell by almost 5%.
Midweek, oil prices rebounded on hints that the Organisation of Petroleum Exporting Countries and its allies (OPEC+) would pause plans to expand oil production in January.
While the UK’s finalised manufacturing PMI printed lower than expectations, Sterling managed to climb against the ‘Loonie’ as Bank of England (BoE) Governor Andrew Bailey gave a cautiously optimistic speech.
Towards the end of the week, Sterling rose higher still as vaccine tailwinds buoyed trading sentiment: CAD wavered as potential new Covid restrictions threatened oil demand.
At the week’s close, the Canadian Dollar was able to rise once more as unemployment fell and new hires increased in November: the Pound dropped as the UK’s finalised services PMI missed expectations.
Into this week, GBP/CAD is falling despite the UK’s upbeat construction PMI, as WTI prices continue to rise.
Three Things to Watch Out for This Week
- Ivey PMI
Canada’s Ivey PMI is expected to reveal a slowdoen in activity later today, potentially weighing upon the ‘Loonie’.
- Bank of Canada (BoC) Interest Rate Decision
The BoC is expected to leave interest rates unchanged tomorrow. Any hawkish signalling could boost CAD.
- UK GDP
UK GDP is expected to have shrunk in October, likely stifling Sterling demand.
Pound Canadian Dollar Forecast
Looking ahead, the Pound Canadian Dollar exchange rate is likely to be influenced by Canada’s trade balance and Ivey PMI this afternoon. If the PMI decreases on October’s figure as expected, GBP/CAD may correct some of this morning’s losses.
Later in the week, the BoC’s interest rate decision is set to drive movement, followed by a clutch of UK data on Friday.