The Pound Canadian Dollar (GBP/CAD) exchange rate wavered through last week’s session, trading on weaker oil demand and a surprise interest rate hike from the Bank of England (BoE).
Into this week, GBP/CAD reached its highest levels since 9 October, as WTI crude fell by over 5% to under $67 a barrel.
What’s Been Happening: Oil Markets Vulnerable on Omicron Uncertainty
The Pound (GBP) rose against the majority of its peers last Tuesday, on upbeat UK employment figures. Meanwhile, the Canadian Dollar (CAD) tumbled in response to the International Energy Agency (IEA)’s revision of their oil demand predictions.
Midweek, Sterling rose further on higher-than-expected inflation, as Canadian CPI remained at 4.6%, disappointing hopeful investors.
On Thursday, the ‘Loonie’ gained against GBP initially, as ADP employment figures supported the currency. However, the BoE subsequently hiked UK interest from 0.1% to 0.25% contrary to market expectations, reversing the Pound’s downslide.
At the end of the week, strong UK retail sales for November beat predictions, although Omicron fears limited Sterling’s upside potential; CAD fluctuated against its peers on wavering oil dynamics.
Into this week, the Pound Canadian Dollar exchange rate jumped to a 10-week high and is maintaining upside as Canadian crude prices slide on Omicron concerns. Meanwhile, GBP is under pressure from worries of imminent tighter Covid restrictions.
Three Things to Watch Out for This Week
- Canadian Retail Sales
Canadian retail sales are expected to have increased in October, potentially buoying the ‘Loonie’.
The UK’s finalised GDP figures print tomorrow, forecast to reveal less growth than in Q2 2021. Canadian GDP is expected to reveal increased growth in October, which may boost CAD.
- Covid Developments
Any further Covid developments are likely to influence the forex markets. If the UK government decides to enforce new January measures, GBP could see headwinds.
Pound Canadian Dollar Forecast
External factors could play a big part in currency dynamics this week – while data is scarce over the Christmas period, political volatility is unsettling investors.
Decreasing confidence in the British Prime Minister may lead to further tension and uncertainty.