The Pound Canadian Dollar (GBP/CAD) exchange rate climbed throughout last week’s session in response to volatile oil prices.
What’s Been Happening: Volatile Oil Prices Place Pressure on the Canadian Dollar
The Pound Canadian Dollar exchange rate fluctuated at the start of last week as soft oil prices which weighed on CAD.
At the same time, the Pound was unsettled on Monday as the initial findings from Sue Gray’s ‘partygate’ inquiry highlighted a ‘failure of leadership’ in No 10.
Sterling then edged higher as market sentiment improved, and further lifted as GBP investors repositioned ahead of Thursday’s Bank of England’s (BoE) interest rate decision.
The BoE raised rates, as expected, from 0.25% to 0.5%. However, four Monetary Policy Committee (MPC) members voted to hike rates to 0.75%, which was regarded as a hawkish signal for future policy decisions.
Meanwhile, CAD remained mixed in response to unsteady oil prices despite higher-than-forecast Canadian GDP in November.
At the end of the week, GBP’s gained were capped by the increased energy price announcement, whilst Canadian employment figures showed less individuals in employment which further negatively impacted the economy.
This weighed on CAD’s appeal in spite of an oil price rally which pushed WTI crude prices to their highest levels in 8 years.
Three Things to Watch Out for This Week
1. UK GDP Growth Rate Q4
On Friday, GBP may be buoyed by the UK’s GDP growth rate for the fourth quarter which is forecast to remain unchanged at 1.1%.
2. Canadian Balance of Trade
Canada’s balance of trade for January is expected to fall which may weigh on CAD’s appeal this afternoon. If this prints true, then it will show that less trade occurred during the festive month which could hamper the commodity-linked currency.
3. UK Political Uncertainty
UK Political uncertainty is also likely to continue to influence the GBP/CAD exchange rate this week. Will Boris Johnson face a no-confidence vote?
Pound Canadian Dollar Forecast
Looking ahead, will mixed Canadian trade data and UK political uncertainty cause the GBP/CAD exchange rate to fluctuate this week?