Pound Canadian Dollar (GBP/CAD) Exchange Rate Weekly Forecast: GBP Buoyed by Political Optimism

The Pound Canadian Dollar (GBP/CAD) exchange rate strengthened last week, as political optimism countered dour UK retail news.

What’s Been Happening: Political Optimism Drives Sterling

The Pound Canadian Dollar exchange rate began the week strongly, but encountered midweek headwinds before ending the week with a decisive rally.

The Pound enjoyed bountiful support on Monday, as investors moved to buy the dip following the previous week’s dramatic sell-off. This allowed GBP to begin to recover, but the gains were capped midweek by downbeat news from UK retailers.

Late week optimism towards Rishi Sunak began to boost Sterling further as he sought to tackle the Northern Ireland Protocol. Aiming to solve a Brexit bugbear and avert a trade-war with the EU combined with better-than-expected GDP data, strengthening Sterling.

Meanwhile, the Canadian Dollar traded flatly. The oil-linked ‘Loonie’ was unable to make gains as oil prices ebbed and flowed, with China’s Covid policy affecting demand.

Further dampening the Canadian Dollar was the currency’s increasingly positive correlation with the US Dollar. As USD succumbed to lower-than-expected inflation data, CAD fell alongside it, prompting GBP/CAD to strengthen.

Three Things to Watch Out for This Week

  1. UK Government’s Autumn Statement

The latest fiscal plan from the UK Government is expected on Thursday. With tax rises and spending cuts anticipated, Sterling may rally due to the government’s aim to ‘balance the books’.

  1. Inflation

Inflation data for both Canada and the UK is due on Wednesday. With a rise expected for the UK, and no change forecast for Canada, the pairing may strengthen.

  1. Canadian PPI

Canada’s October PPI data is due on Friday. A forecast increase from 0.1% to 0.4% could bolster CAD, with investors considering further tightening from the Bank of Canada.

Pound Canadian Dollar Outlook

The Pound Canadian Dollar exchange rate may see fresh volatility this week due to the key data releases. The UK’s Autumn Statement may be the primary focus for investors, with a return to fiscal orthodoxy expected. Such a move would likely bolster GBP.

John Mulcahey

Contact John Mulcahey


Related
Do Not Sell My Personal Information