Pound Canadian Dollar Fluctuates amid Growing Recession Fears and UK Political Turbulence

The Pound Canadian Dollar (GBP/CAD) exchange rate fluctuated throughout last week amid UK political uncertainty and tumbling oil prices.

What’s Been Happening: Pound Canadian Dollar Exchange Rate Rocked by Political Uncertainty

Pound started the week under pressure as a lack of data left Sterling vulnerable to market sentiment. Capping any further losses was a hawkish speech by Bank of England (BoE) Chief Economist Huw Pill as investors awaited the CPI release.

The Pound initially plummeted following the CPI figures after annual inflation in the UK hit a fresh 40-year high of 9.1% for May. The modest rise saw GBP investors slash their BoE rate hike bets.

Towards the end of the week, political headwinds weighed on the Pound as Boris Johnson’s Conservative party lost two seats in one night, casting further doubt on Johnson’s leadership.

Meanwhile, the Canadian Dollar started the week on the strong foot as retail sales printed better than expected but fluctuating crude oil prices capped any significant gains.

Canada’s inflation rate unexpectedly accelerated to 7.7% in May, the highest since 1983. But the sharp rise also increased the likelihood of the Bank of Canada (BoC) raising interest rates, boosting the ‘Loonie’.

By the end of the week, the Canadian Dollar was pressured by an ongoing slump in oil prices.

Three Things to Watch Out for This Week

  1. BoE Speeches

Key speeches from the BoE could give further indication on how the central bank will be tackling inflation if the hawkish rhetoric is maintained.

  1. GDP

Both UK and Canada GDP data is due out this week.  An expected slowdown of growth in both countries could put pressure on both Sterling and the ‘Loonie’.

  1. UK Consumer Credit & Mortgage Data

With the cost-of-living crisis worsening, consumer credit is expected to continue increasing higher than the pre-pandemic average, whilst mortgage approvals are expected to drop once again.

GBP/CAD Forecast

Elsewhere, the remainder of this week could see the GBP/CAD exchange rate waver further with the fluctuating oil market and the continued political and social turmoil that is gripping the UK.

Danny Tingle

Contact Danny Tingle


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