The Pound Canadian Dollar (GBP/CAD) exchange rate plunged as the UK’s cost-of-living crisis continued to sap demand as oil prices crashed amid a waning global market mood.
What’s Been Happening: GBP/CAD Exchange Rate Continued its Slump
The Pound (GBP) failed to find much demand at the beginning of the week as the Bank of England (BoE) released the latest lending figures. The cost-of-living crisis continues to take its toll on consumers as borrowing soared by £1.425bn in July.
Meanwhile, further weighing Sterling down was the first contracting of the manufacturing sector since May 2020. Along with fears of inflation reaching 22%, the economic outlook for the UK grows ever darker.
End of the week and the Pound slumped to a fresh 12-year low amidst the deteriorating economic outlook. Soaring energy costs and no government plans of financial aid continued to weigh heavy. The Resolution Foundation warned that three million people could be plunged into poverty this winter.
Meanwhile, the Canadian Dollar (CAD) started the week on the front foot as oil prices remained above $90 a barrel. But unexpectedly poor Chinese manufacturing data saw demand slump to a fresh two-week low.
Midweek and the fourth consecutive month of GDP growth lent considerable support to the ‘Loonie’. But a drop in manufacturing PMI for August capped any significant gains. The manufacturing sector fell to 48.7 from 52.5 in July, ending a 25-month growth streak.
Three Things to Watch Out for This Week
- BoC Interest Rate Decision
An expected hike of 75bps would push the rate to 3.25%, a fresh high not seen since 2008.
- UK Cost-of-Living Support
With Liz Truss replacing Boris Johnson and announced as prime minister, both the UK and investors await an expected rollout of fiscal aid.
- Oil Prices
With a looming energy crisis is Europe and slowdowns in China, oil prices look to remain volatile.
Pound Canadian Dollar Forecast
Elsewhere, any further developments in China and their stuttering economy could have significant impact on the global market sentiment, and in turn, the commodity-linked ‘Loonie’.