The Pound Canadian Dollar (GBP/CAD) exchange rate fluctuated wildly last week following some mixed UK data releases and oil market volatility
What’s Been Happening: GBP/CAD Exchange Rate Fluctuated amid Wavering Global Market Sentiment
The Pound (GBP) opened last week relatively strong despite weaker-than-expected GDP growth. A forecasted 0.4% increase was met short with just 0.2%. Buoying Sterling early on was the positive news of Ukraine’s successful counter-offensives against Russia, boosting early optimism for an end to the conflict.
Lending further support was a surprise drop in UK unemployment in August. However, real wages continued to lag behind inflation.
Mixed inflation data then extended the upside in the Pound as headline CPI softened to 9.9%, against an expected rise to 10.2%. A dramatic drop in fuel prices drove inflation down, but core inflation continued to tick higher, as prices increased by 0.5%.
A larger-than-expected contraction in retail sales then weighed on Sterling in the latter half of the week as it stoked recession fears.
Meanwhile, the Canadian Dollar (CAD) started the week on the back foot as oil prices languished around the $85 a barrel mark, reflecting a downbeat global market sentiment.
A subsequent rebound in crude prices offered a leg up to CAD exchange rates in the middle of the week.
A flurry of positive data and news out of China boosted the commodity-linked ‘Loonie’ at the end of the week. Industrial production edged higher and marked a fourth consecutive month of growth in China.
Three Things to Watch Out for This Week
- Bank of England Interest Rate Decision
Another 50bps rate hike from the Bank of England (BoE) could weaken the Pound this week, amid concerns over policy divergence with other central banks.
- Canada Inflation Rate
A second consecutive month of softening inflation to 7.3% could see support for the Canadian Dollar wane.
- UK Manufacturing and Services PMI
Continued slowdowns in the manufacturing sector could weigh on the Pound, with services also expected to stall.
Pound Canadian Dollar Forecast
Elsewhere, fluctuating oil prices may continue to infuse volatility into the Pound Canadian Dollar exchange rate this week.