Pound Canadian Dollar (GBP/CAD) Exchange Rate Climbs, falls on CAD Strength

Pound Canadian Dollar (GBP/CAD) exchange rate firmed in the first half of the week as rate hike bets gained momentum for February’s Bank of England (BoE) meeting. Later in the week, a lack of UK data exposed the Pound (GBP) to downside, as Canadian jobs figures boosted the Canadian Dollar (CAD).

What’s Been Happening: Upbeat Data Boosts GBP, CAD Firms on Oil Dynamics

The Pound traded up against the Canadian Dollar at the beginning of last week, as investors priced in a February rate hike with a likelihood of 82.5%. A better-than-expected manufacturing PMI also boosted Sterling sentiment.

Prime Minister Boris Johnson announced that no further Covid restrictions would be implemented, also underpinning GBP gains.

Midweek, the Canadian Dollar faced headwinds as the Organisation of Petroleum Exporting Countries (OPEC) and its allies decided to increase oil output.

The ‘Loonie’ subsequently strengthened as conflict in Kazakhstan and a disruption to Libyan exports raised the value of crude oil.

Later in the week, upbeat jobs data extended CAD gains as the number of new hires almost doubled expectations. Meanwhile, news of an NHS staffing crisis subdued Pound trading.

Three Things to Watch Out for This Week

  1. UK GDP

UK GDP data is likely to be the main influence on GBP/CAD this week. If it increases as expected, the Pound may recoup some losses.

  1. UK Production Data

The UK will publish industrial and manufacturing production data on Friday, for the month of November. Both are expected to have increased, potentially supplying Sterling tailwinds.

  1.  Canadian Oil Dynamics

The Canadian Dollar will continue to be affected by oil prices: if output from Kazakhstan and Libya improves, oil prices could drop, subduing the ‘Loonie’.

Pound Canadian Dollar Forecast

The Pound Canadian Dollar exchange rate currently lacks direction following disappointing UK retail data. In the near-term, GBP/CAD may continue to waver amidst a shortage of significant data from Canada or the UK.

Trading will be influenced predominantly by external factors, until Friday when a clutch of UK data could affect Pound exchange rates. If UK GDP increases as forecast, GBP/CAD is likely to climb.

Olivia Evershed

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