Pound Canadian Dollar Exchange Rate Weekly Forecast: GBP/CAD Fluctuates as Peace Talks are Threatened

The Pound Canadian Dollar (GBP/CAD) exchange rate wavered throughout last week’s session as concerns surrounding Russian-Ukraine negotiations mounted.

What’s Been Happening: Pound Canadian Dollar Fluctuates as Ukraine Concerns Mount

The Pound Canadian Dollar exchange rate slipped at the beginning of last week’s session as evidence of Russian ‘atrocities’ came to light.

In response, Volodymyr Zelenskiy suggested peace talks with his Russian counterparts would be difficult. This worried GBP investors as a prolonged war may further exacerbate the UK’s cost of living crisis.

Meanwhile, the ‘Loonie’ seesawed throughout the week in relation to oil prices: on Monday, CAD was boosted as Saudi Arabia hiked Arab Light crude prices, causing oil prices to rise elsewhere.

On Tuesday, the UK services PMI for March was revised higher, reaching 62.6, and achieving the second fastest increase in business activity in 25 years, limiting Sterling’s losses.

At the same time, a narrowing of Canada’s trade surplus in February, and upswing in the Ivey PMI, infused some volatility in the Canadian Dollar in midweek trade.

At the end of the week, Canada’s unemployment rate for March dropped to 5.3%, the lowest record since 1976; meanwhile, the Canadian economy added 72.5K jobs, providing CAD with some support.

Meanwhile the Pound weakened as Bank of England (BoE) policymaker, Huw Pill, delivered a dovish speech, questioning ‘whether monetary policy is the appropriate tool to address these sovereign market functioning concerns’.

Three Things to Watch Out for This Week

1.            Ukraine Crisis

The Russia-Ukraine war is likely to continue driving volatility into the market: if peace talks continue to show limited progress it may weigh on the risk-sensitive Pound.

2.            UK Inflation Reading

If the UK’s inflation reading prints in line with market forecasts of 6.7%, it may amplify the UK’s cost of living crisis further and weaken the Pound.

3.            BoC Interest Rate

An aggressive rate hike from the Bank of Canada (BoC) could bolster CAD exchange rates this week, particularly if its forward guidance hints at more hikes to come.

Pound Canadian Dollar Forecast

Looking ahead, should peace talks between Russian and Ukrainian officials remain at a stalemate, it may continue to drive volatility in the Pound Canadian Dollar exchange rate.

Bethany Uren

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