The Pound Canadian Dollar (GBP/CAD) exchange rate wavered throughout the week as UK PM Boris Johnson faced accusations of attending a forbidden lockdown party. Meanwhile, movement in the Canadian Dollar (CAD) was steered by oil prices.
What’s Been Happening: Johnson Told to Resign, CAD Buoyed by Oil Export Links
The Pound (GBP) ticked up against the ‘Loonie’ at the beginning of last week, as investors anticipated more aggressive monetary policy tightening from the Bank of England (BoE).
Meanwhile, slipping oil prices and an absence of notable data led the Canadian Dollar to fall against its peers.
Sterling gains were subsequently reversed midweek as investors cashed in profits and pressure mounted on Boris Johnson over the ‘partygate’ scandal. Both Tory and Labour MPs called for Johnson to resign his position.
Conversely, CAD climbed on stronger oil prices, supported by new export links across the US Gulf Coast.
Towards the end of the week, GBP was able to firm once more as volatility in crude prices unsettled the ‘Loonie’. Better-than-expected GDP figures for the month of November helped the Pound to recoup its losses.
Into this week, GBP/CAD has fallen as oil prices improve in response to bulk-buying. The Pound is pressured as the number of deaths following a positive Covid test continues to rise, with a 45% increase from the previous fortnight.
Three Things to Watch Out for This Week
- Inflation Data
Tomorrow’s inflation data is expected to reveal an increase in both the UK and Canada. Both currencies may benefit as central banks are encouraged to tighten monetary policy.
- Consumer Confidence
UK confidence figures are forecast to remain at -15 on Friday, potentially subduing the Pound.
- Retail Sales
UK retail sales are expected to have decreased in December, exerting potential GBP downside; meanwhile, Canadian sales look to have increased in November.
Pound Canadian Dollar Forecast
The Pound Canadian Dollar exchange rate may be affected by external factors this week, in addition to data releases.
Oil prices will likely correlate with CAD movement, while Sterling trading may be influenced by ongoing political tensions.