The Pound Canadian Dollar (GBP/CAD) exchange rate plunged amid a worsening cost-of-living crisis exacerbated by soaring inflation.
What’s Been Happening: GBP/CAD Exchange Rate Plummets amid Cost-of-Living Crisis
The Pound (GBP) opened the week strongly as unemployment figures held steady and remained at 3.8%, holding below the pre-pandemic levels. But the underlying caveat was the widening wage gap, as growth in regular pay fell by 3%, the largest drop since 2001.
Midweek saw Sterling come under increased pressure as CPI jumped to 10.1%, a fresh 40-year high. The Pound saw a brief spike in demand as rate hike expectations bolstered but soon dissipated as the cost-of-living crisis is set to worsen.
End of the week and positive retail sales failed to provide much support to the Pound. With expectations of a 0.2% decline, July sales unexpectedly increased by 0.3%. However, non-food sales slumped, highlighting consumers holding back from unnecessary spending.
Meanwhile, the Canadian Dollar (CAD) started the week as volatile as the oil markets as a downbeat global market sapped demand for crude.
However, Canadian inflation softened from its 39-year high down to 7.6%. With experts now hoping that inflationary pressures have peaked, the ‘Loonie’ saw a boost.
With weakening demand from China, oil prices dropped to their six-month low, weighing down the commodity-linked Canadian Dollar. By the end of the week, WTI crude finally broke the $90 a barrel mark but remained under pressure amid a wavering global market sentiment.
Three Things to Watch Out for This Week
- UK Politics
Pressure is building on the soon-to-be Prime Minister in providing sufficient fiscal support before millions of households fall into poverty.
- Oil Prices
A wavering global market sentiment could see oil prices continue their volatile fluctuations.
- UK Social Unrest
The ‘summer of discontent’ looks to continue to weigh on the Pound as the UK economy is rattled by the cost-of-living crisis.
Pound Canadian Dollar Forecast
Elsewhere, UK manufacturing and services PMIs are set to print today. A slowdown in the services sector could be disastrous to Sterling.