The Pound Canadian Dollar (GBP/CAD) exchange rate strengthened last week, as Rishi Sunak made moves to soothe investors during his first days as Prime Minister.
What’s Been Happening: Sunak Strengthens Pound
The Pound Canadian Dollar exchange rate began last week on good footing, prompting a near week-long rally as Rishi Sunak was crowned Prime Minister.
Despite a raft of poor data, such as PMI flashes indicating the UK economy had contracted in October, investors were calmed by Sunak’s fiscal background. With his previous role as Chancellor, GBP investors hoped he could bring order following the chaos of the last month.
Despite the news of a delay to the Governments fiscal statement, GBP continued to rally against CAD due to a smaller-than-expected rate hike from the Bank of Canada (BoC). Elsewhere however, with the Bank of England (BoE) left in the dark before their next interest rate decision, GBP’s rally came to a close.
For the Canadian Dollar, last week saw volatile trade as the oil-linked ‘Loonie’ oscillated alongside oil prices. CAD climbed when oil strengthened, but usually remained sombre.
The aforementioned rate hike weakened the ‘Loonie’ as the BoC delivered a hike of 50bps rather than the expected 75bps.
Three Things to Watch Out For
- BoE Interest Rate Decision
Thursday brings the BoE’s interest rate decision. While they have to make this choice without knowing the full extent of government fiscal policy, the size of the hike is in question. A smaller 50bps rise may dent GBP.
- CA Balance of Trade
Canada’s balance of trade for September is forecast to show a narrowing of the country’s trade surplus. This may weaken the commodity-linked ‘Loonie’.
- Canadian Unemployment Rate
Friday brings the Canadian unemployment rate for October. An expected increase expected may dent CAD exchange rates as it raises doubts over future BoC rate hikes.
Pound Canadian Dollar Outlook
The Pound Canadian Dollar exchange rate is likely to remain subdued this week, as investors may be cautious ahead of the BoE’s interest rate decision on Thursday. However downbeat Canadian data could strengthen the pairing.