The Pound Canadian Dollar (GBP/CAD) exchange rate fluctuated throughout last week’s session as Russia-Ukraine peace talks resumed.
What’s Been Happening: Pound Canadian Dollar Wavered Amidst Russia-Ukraine Peace Talks
The Pound Canadian Dollar exchange rate started on the front foot as Russia-Ukraine peace talks struck a cautiously upbeat mood, buoying the Pound and undermining the Canadian Dollar as it prompted oil prices to soften.
Sterling’s ascent was also supported by upbeat UK employment figures, as unemployment fell to 3.9% in January.
In the middle of the week, CAD slipped in spite of a strong CPI reading. Canadian inflation hit a thirty-year high of 5.7% in February, but was offset by a continued fall in oil prices.
The second half of the week then saw a dramatic drop in the Pound, following the Bank of England’s (BoE) March interest rate decision.
While the Bank hiked rates as forecast, its cautious forward guidance came as a major disappointment to GBP investors.
At the end of the week, strengthening oil prices limited the ‘Loonie’s losses. Moreover, a better-than-expected retail sales print further bolstered CAD exchange rates. January’s data exceeded both previous figures and market forecasts, printing at 3.2%.
Three Things to Watch Out for This Week
1. Russia-Ukraine War
The Ukraine crisis is likely to remain the key catalyst for the foreseeable future. Should the conflict continue to intensify then oil prices are likely to rise, bolstering the ‘Loonie’ in the process.
2. UK Inflation Reading
The UK’s inflation reading for February is expected to increase from 5.5% to 5.9%. Should this print true, it may reignite BoE rate hike bets and support Sterling.
3. BoC Deputy Governor Kozicki Speech
Bank of Canada (BoC) Deputy Governor, Sharon Kozicki, is scheduled to deliver a speech at the end of the week. If Kozicki strikes a dovish tone, it which may weigh on CAD movement.
Pound Canadian Dollar Forecast
Looking ahead, should future peace talks between Russian and Ukrainian Presidents find a means of ending the war, it may boost the Pound Canadian Dollar exchange rate.