The Pound Canadian Dollar (GBP/CAD) exchange rate plummeted to fresh nine-year lows as the UK’s cost-of-living crisis worsens.
What’s Been Happening: GBP/CAD Exchange Rate Continued its Slump as Oil Prices Climbed
The Pound (GBP) was left vulnerable to worsening domestic woes amid a lack of data at the start of the week.
Mixed PMI data lent some moderate support to Sterling. The manufacturing sector contracted for the first time since May 2020. Services however, printed marginally better than expected. But with the softest increase in 18 months, concerns of a contraction are mounting.
End of the week and the Pound fell to a fresh nine-year low as Ofgem announced the 80% energy price cap raise, compounding the cost-of-living crisis. Average annual energy bills are set to soar to £3450 from October. A continued reluctance from government intervention could weigh on the UK economy, and the Pound.
Meanwhile, the Canadian Dollar (CAD) opened the week struggling to find much demand. Oil prices retreated from the previous week’s highs.
However, the commodity-linked ‘Loonie’ saw a welcome boost in the form of a substantial fiscal support package from the Chinese government. A 1 trillion Yuen (£124bn) injection is hoping to reinvigorate the faltering Chinese economy, lending considerable support as demand for oil jumped to a three-week high.
End of the week saw a downturn in global economic sentiment and WTI crude saw a drop, sapping demand for the Canadian Dollar.
Three Things to Watch Out for This Week
- UK Lending Figures
Amid soaring inflationary pressures, lending figures could further highlight households struggling to make ends meet.
- Canada GDP
An expected expansion of the Canadian economy could bolster the ‘Loonie’ amid hopes of peaking inflationary pressures.
- UK Cost-of-Living Crisis
Unless the UK government intervenes with a substantial financial support package, both the UK and the Pound could stutter.
Pound Canadian Dollar Forecast
Elsewhere, China’s economic recovery will be closely monitored and any setbacks to the world’s second largest economy could see a dip in global market sentiment.