The Pound Canadian Dollar (GBP/CAD) exchange rate fluctuated throughout last week’s session in response to UK political uncertainty.
What’s Been Happening: UK Political Uncertainty Weighed on Pound
The Pound Canadian Dollar exchange rate slipped at the start of last week as the Pound was undermined by political headlines, meanwhile the commodity-linked Canadian Dollar strengthened as oil prices rose to $91 per barrel.
Sterling then edged higher as the British Retail Consortium’s retail sales for January printed above market forecasts, as figures beat the predicted 0.3% contraction with an 8.1% expansion.
However, Boris Johnson’s slanderous comments about Keir Starmer limited GBP’s appeal as UK politics, once again, came under scrutiny.
Parallel with oil prices, the ‘Loonie’ dipped on Tuesday, however regained a modest uptick on Wednesday. This enabled CAD to climb against some of its weaker peers, but an absence of Canadian data capped its potential.
By midweek, the UK’s cost-of-living crisis and fresh Brexit anxieties weighed on Sterling’s demand, while fluctating oil prices dampened the appeal of the ‘Loonie’.
The Bank of England’s (BoE) Chief Economist Huw Pill also applied some pressure with some cautious comments about the bank’s rate hike outlook.
At the end of the week’s trade, the geopolitical tensions strengthened oil prices, and thus CAD, whilst GBP was buoyed by upbeat UK GDP figures.
Three Things to Watch Out for This Week
1. UK and Canadian Inflation Rate
On Wednesday, the release of the UK and Canada’s consumer price index will be in focus, with inflation forecast to remain unchanged at 5.4% and 4.8%, respectively.
2. BoC Governor Speech
The ‘Loonie’ may be influenced by a speech from the Bank of Canada’s (BoC) Governor, Timothy Lane. Will his speech hint at the bank’s future monetary policy direction?
3. Geopolitical Tensions
Geopolitical uncertainty is likely to continue impacting the GBP/CAD exchange rate this week as the Russia-Ukraine developments remain in the spotlight.
Pound Canadian Dollar Forecast
Looking ahead, will the geopolitical tensions strengthen oil prices and cause pressure on the GBP/CAD pairing during this week?