Pound Canadian Dollar Exchange Rate Weekly Forecast: GBP/CAD Fluctuates amid Soaring UK CPI

The Pound Canadian Dollar (GBP/CAD) exchange rate wavered throughout last week’s session, rising overall, as UK inflation surged to a 30-year high. 

What’s Been Happening: Pound Canadian Dollar Fluctuates as UK CPI Reading Reaches 30-Year High

The Pound Canadian Dollar exchange rate rose at the beginning of last week’s session as UK government bond yields hit a six-year high, increasing by 0.09%.

Moreover, GBP investors priced in a fourth consecutive interest rate hike in May despite the Bank of England’s (BoE) dovish perspective, further aiding Sterling.

On the other hand, according to the latest GDP reading, the UK economy slowed to 0.1% in February, capping GBP’s gains.

At the same time, the ‘Loonie’ seesawed throughout the week in correlation to oil prices. On Monday, CAD dropped amid lockdowns across China and US plans to release oil reserves. On Tuesday, however, CAD was supported as oil prices increased by 5%.

Meanwhile, the Pound was directionless following mixed employment data: the UK unemployment rate slipped to pre-pandemic levels whilst average earnings fell short against high inflation.

Midweek, the UK’s CPI reading for March was revealed: inflation surged to a 30-year high, hitting 7%. This boosted rate hike bets and supported Sterling. However, cost-of-living concerns capped GBP’s gains.

Meanwhile, the Bank of Canada (BoC) delivered a 50-basis point hike, which also limited GBP/CAD’s upside.

Three Things to Watch Out for This Week

  1. Russia-Ukraine War

The Ukraine crisis is likely to continue weighing on GBP/CAD: should peace talks remain at an impasse, it may hinder Sterling.

  1. Canadian Inflation

If Canada’s inflation reading reaches market forecasts of 6.1%, it may boost BoC interest rate hike bets and improve CAD’s appeal.

  1. BoE Speeches

Speeches from BoE Governor Andrew Bailey and policymakers Anna Sweeney and Catherine Mann may influence GBP, particularly if they discuss possible future monetary policy. If officials maintain their dovish perspectives, it may limit demand for Sterling.

Pound Canadian Dollar Forecast

Looking ahead, with Russia’s invasion of Ukraine, Canada’s CPI, and the possibility of more dovish rhetoric from the BoE, GBP/CAD could come under pressure.

Bethany Uren

Contact Bethany Uren


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