The Pound Canadian Dollar (GBP/CAD) exchange rate has slipped this morning, though it remains near a multi-week high amid weaker oil prices.
What’s Been Happening: GBP/CAD Exchange Rate Firms as Oil Prices Plummet
A lack of major data left Sterling vulnerable to domestic political concerns early in the week. As the Conservative leadership contest continued, investors became increasingly concerned about the growing divide within the Tory party.
Midweek and the ‘summer of discontent’ rumbled on and continued to weigh on the Pound (GBP), with increased industrial action across the board.
In addition, cost-of-living concerns pressured GBP as new data showed that UK households are taking on more debt to face rising costs.
However, expectations of a more hawkish rate hike at the Bank of England’s (BoE) upcoming meeting underpinned the Pound.
Meanwhile, the Canadian Dollar (CAD) started the week under pressure as oil prices slumped to their lowest level since April amid a downbeat mood and demand fears.
Troubling news out of China weighed on the commodity-linked ‘Loonie’ as surging Covid cases threatened to slow the economy down once again. Lockdowns and restrictions stalled manufacturing and sapped global demand for oil.
The end of the week saw the Canadian Dollar boosted by better-than-expected GDP growth for June as the preliminary reading showed a 0.1% expansion in the economy. This helped prevent further CAD losses.
Three Things to Watch Out for This Week
- BoE Interest Rate Decision
All eyes will be on the BoE interest rate decision on Thursday. With inflation spiralling out of control, investors are expecting a 50bps hike.
- Canadian Unemployment
An expected uptick in the jobless rate could exert pressure on the ‘Loonie’, snapping a five-month streak of falling unemployment.
- Oil Prices
With a souring global market mood, falling demand for oil could once again dent the Canadian Dollar.
Pound Canadian Dollar Forecast
Elsewhere, the GBP/CAD exchange rate could see further fluctuations as UK political and social volatility continue to weigh on the Pound.