The Pound Canadian Dollar (GBP/CAD) exchange rate trended higher last week, amidst heightened Russia-Ukraine tensions.
What’s Been Happening: Pound Canadian Dollar Infused with Volatility By Russia-Ukraine Tensions
The Pound Canadian Dollar exchange rate slipped at the start of last week as a risk off market sentiment and lack of UK data undermined the Pound’s potential, whilst CAD wavered amid fluctuating oil prices.
Sterling then faced some pressure as data revealed inflation overtook wage growth during the fourth quarter of 2021, adding to the cost-of-living crisis.
The ‘Loonie’ also struggled on Tuesday as crude prices fell amid reports Russia withdrew some troops from its border with Ukraine.
By midweek, Sterling rose against many of its peers, boosted by an unexpected increase in inflation which bolstered expectations for another rate hike from the Bank of England (BoE) in March.
The upbeat data continued to underpin the Pound into Thursday, despite an unpromising report by the British Chambers of Commerce regarding the post-Brexit’s trade deal.
Meanwhile, CAD struggled in mid-week trade in spite of better-than-expected Canadian CPI and improving oil prices.
On Friday, Russia-Ukraine developments continued to drive market volatility, limiting the Pound’s potential. However, better-than-forecast UK retail sales helped Sterling to close the session on a positive note
On the other hand, the Canadian retail sales showed a 1.8% contraction in December which weighed on CAD exchange rates.
Three Things to Watch Out for This Week
1. Geopolitical Developments
The Ukraine crisis has propelled oil prices to new multi-year highs. Expect this to underpin the commodity-linked ‘Loonie’ this week.
2. BoE Speeches
A series of speeches by BoE policymakers, including Governor Andrew Bailey could influence the Pound this week. Will a broadly hawkish consensus bolster Sterling?
3. Brexit
Brexit is also likely to continue to act as a key catalyst for the Pound
Pound Canadian Dollar Forecast
Looking ahead, will the continued escalation of Russia-Ukraine tensions strengthen oil prices and weigh on the Pound Canadian Dollar exchange rate?