Pound Canadian Dollar (GBP/CAD) Exchange Rate Directionless as UK Cost-Of-Living Crisis Hits Retail

Pound Canadian Dollar (GBP/CAD) Exchange Rate Narrows amid UK Retail Woes

The Pound Canadian Dollar (GBP/CAD) exchange rate is narrowing this morning, as UK retailers brace for underperformance on Black Friday.

At the time of writing, GBP/CAD is trading at around CA$1.6144, showing little movement from this morning’s opening rates.

Pound (GBP) Mixed as Cost-Of-Living Crisis Limits Retail

The Pound (GBP) is seeing mixed trade this morning, as the cost-of-living crisis continues to impact the country.

Black Friday is expected to bring a bleak picture for UK retailers, as households have less disposable income. Coupled with strikes across the Royal Mail, analysts are expecting UK consumers to spend substantially less this year.

Richard Flax, Chief Investment Officer at Moneyfarm explored this further. He stated:

‘Friday should be one of the busiest days for UK retailers but concerns about constrained budgets and the added issue of a strike by Royal Mail workers are both expected to make the affair a rather damp squib.’

As such, poor expectations for the UK’s retail sector are keeping investors away. With many UK retailers already feeling the pressure from previous market volatility, slumping trade today could bring a further blow.

Similarly, industrial action beyond the Royal Mail is further bringing caution. Nurses have announced December strikes, with other NHS workers to follow suit into 2023.

Further weighing on GBP is a tepid market mood. With Sterling seeming increasingly risk-sensitive, cautious trade is further capping any gains to be made this morning.

Canadian Dollar (CAD) Directionless as Oil Prices See Uptick

The Canadian Dollar (CAD) is lacking direction this morning, as oil prices see a modest recovery in price.

Following consecutive days of steep losses, oil prices have begun to stabilise, lending the oil-linked ‘Loonie’ modest support.

Spiking Covid cases in China throughout the week have weighed heavily on the price of oil, as lockdowns limit demand. Further affecting the price has been EU discussion over capping the price of Russian oil.

While no set cap has been agreed on, the discussion of a $65-70 cap saw oil prices tumble, dragging the ‘Loonie’ down with it.

Canadian crude oil currently trades at around $51 a barrel. As such, the cap has served to mute further gains that could be made by recovering prices.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Forecast: Canadian GDP to Dent ‘Loonie’?

Looking ahead to next week, the core catalyst of movement for GBP/CAD may be Canada’s Q3 GDP release.

The data is due on Tuesday, and is expected to show a fall from 0.8% to 0.4%. Should this print as forecast, CAD may weaken as fears over the stability of the Canadian economy.

For the Pound, data is scarce over the coming week. As such, Sterling may be beholden to domestic headlines. With the recession continuing to weigh upon businesses and households, and further updates could weaken GBP.

John Mulcahey

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