Pound Canadian Dollar (GBP/CAD) Exchange Rate Weekly Forecast: GBP/CAD Oscillates as Domestic Headlines Rock Pound

The Pound Canadian Dollar (GBP/CAD) exchange rate endured volatility last week, as economic and political headlines swayed the Pound.

What’s Been Happening: Autumn Statement and Inflation Rock GBP

The Pound Canadian Dollar exchange rate began poorly and traded widely last week as the UK’s economic outlook darkened.

The week began with Sterling weakened, as UK retailers outlined the impact of the cost-of-living crisis on business and consumer. While Tuesday brought respite with above-forecast wage growth, headline inflation leaping to 11.1% saw GBP slide on Wednesday.

Following Chancellor Jeremy Hunt’s Autumn Statement, and official confirmation of recession, Sterling began to slide against CAD. Growth in retail sales allowed GBP to rally and hold at a stronger level than the week’s opening.

Meanwhile, the Canadian Dollar saw a similar week of volatility. Inflation printed as forecast, but still saw the ‘Loonie’ tumble as oil prices turned unstable.

Falling oil prices served to send the commodity-linked currency on a downward trend to close out the week.

Three Things to Watch Out for This Week

  1. UK Manufacturing and Service PMI Flashes

Wednesday brings the latest private sector PMI data for the UK. Contractions are expected across the board, which may lead to weakness for GBP.

  1. CA Retail Sales

Later today, the latest Retail sales data for Canada is released. A fall to -0.5% is expected, which could send CAD tumbling.

  1. Central Bank Speeches

Throughout the week, officials from both the Bank of Canada (BoC) and Bank of England (BoE) are scheduled to speak. If the BoE policymakers continue their bleak outlook for the UK, GBP/CAD may weaken.

Pound Canadian Dollar (GBP/CAD) Outlook

The Pound Canadian Dollar exchange rate may weaken this week, with the UK’s recession still being analysed by investors. With contractions expected across the UK’s private sector, investors may see it as an indicator of a worsening economic outlook. Meanwhile, oil prices have begun to fall, and may drag down the oil-linked Canadian Dollar should they continue to.

John Mulcahey

Contact John Mulcahey


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