The Pound Canadian Dollar (GBP/CAD) exchange rate slumped throughout last week as recession fears grew amid UK political issues, while oil prices recovered.
What’s Been Happening: GBP/CAD Exchange Rate Weakened amid Recession Fears
A lack of data saw the Pound start the week exposed to a downbeat market sentiment. Brexit troubles continue to head towards a potential trade war with the EU, as the proposed bill to unilaterally alter the Northern Ireland protocol passed its second reading in parliament.
Midweek, Sterling was under increased pressure as Bank of England (BoE) Governor Andrew Bailey failed to rally investors. A dovish speech at the European Central Bank (ECB) Forum highlighted the central bank’s concerns of slowing economic growth.
The end of the week saw the final reading for the UK’s GDP print as expected. But it painted a darker picture as business investment was revised lower, contracting 0.6% in the first quarter.
Meanwhile, the Canadian Dollar was also rangebound at the start of the week. However, crude oil prices saw heights of $113.80 per barrel as China recorded its first expansion in the manufacturing sector since February.
The end of the week saw the cost of oil plummet 4% amid growing concerns of a slowdown in the global economy, which weighed on the commodity-linked Canadian Dollar.
Three Things to Watch Out for This Week
- BoE Speeches
Several speeches from the BoE are likely to influence the Pound. Will a broadly dovish tone place more pressure on Sterling?
- Canadian Unemployment
CAD exchange rates may be bolstered by the release of Canada’s latest jobs report as unemployment is forecast to remain at a record low of 5.1% in June.
- UK Politics
The political turmoil Boris Johnson finds himself in on a weekly basis is likely to continue this week, as uncertainty over his future continues to weigh on the Pound.
Pound Canadian Dollar Forecast
Elsewhere, the GBP/CAD exchange rate could waver further with the ongoing UK domestic issues as the cost-of-living crisis worsens, along with the Ukraine crisis weighing on the global economy.