The Pound Canadian Dollar (GBP/CAD) exchange rate fluctuated throughout last week’s session in response to ongoing UK political uncertainty.
Meanwhile, the Bank of Canada (BoC)’s interest rate decision dragged on the ‘Loonie’
What’s Been Happening: ‘Partygate’ Scandal Places Pressure on Sterling
GBP/CAD fluctuated at the beginning of last week’s session as UK PMIs showed a significant slowdown in the service sector, with growth slumping to an 11-month low, whilst falling oil prices weighed on CAD.
The Pound remained unstable as UK political jitters rose, though losses were capped by upbeat public sector borrowing figures.
Meanwhile, CAD investors remained cautious ahead of the BoC’s interest rate decision. Which ultimately triggered a midweek selloff after the bank left its monetary policy unchanged.
GBP struggled as UK political tensions continued to rise as the ‘partygate’ scandal and Sue Gray’s report dominated headlines.
Both Conservative and opposition MP’s questioned Boris Johnson’s capability to remain in power, as well as increasing frustration amongst the British public, which weighed on GBP’s appeal.
Although, Johnson ‘welcome[d]’ the Met Police’s decision to investigate further to provide the ‘clarity’ that the public deserved, GBP investors remained wary, limiting Sterling’s potential.
Into this week, Sue Gray’s update has placed pressure on GBP, whilst the ‘Loonie’ continues to benefit from strong oil prices, which is currently $88.10 per barrel.
Three Things to Watch Out for This Week
1. BoE’s Interest Rate Decision
On Thursday, the Bank of England will deliver its latest interest rate decision. Interest rates are forecast to increase from 0.25% to 0.5% which is likely to bolster GBP.
2. Canadian Unemployment Rate
On Friday, CAD may be weighed on by January’s jobs report, which is forecast to report unemployment rose from 5.9% to 6.2%.
3. ‘Partygate’ Scandal Update
The Pound is likely to be influenced by the fallout from Sue Gray’s initial finding which continue to place pressure on Boris Johnson.
Pound Canadian Dollar Forecast
Looking ahead, will a rate hike and some hawkish forward guidance help to push the Pound Canadian Dollar exchange rate higher this week?