The Pound Canadian Dollar (GBP/CAD) exchange rate traded in a wide range last week, as upbeat economic forecasts buoyed Sterling.
What’s Been Happening: GBP Gains Ground amid Economic Optimism
Against the Canadian Dollar (CAD), the Pound (GBP) steadily rose last week before a sharp drop on Friday.
Monday saw Sterling begin to gain ground, courtesy of a hawkish speech from Bank of England (BoE) Policymaker Catherine Mann. As she reiterated her view that further rate hikes were needed, GBP saw support.
Midweek brought further cheer to GBP investors. The National Institute for Social Research (NIESR) stated that the UK could avoid entering a recession this year. With this optimism, the Pound continued to gain ground.
Friday’s news that the UK economy had narrowly avoided a recession in Q4 added some gains. However, news of sharp slowdown served to limit these gains, leaving GBP vulnerable.
Meanwhile, the Canadian Dollar traded mostly on oil price dynamics. With oil prices in flux, the ‘Loonie’ was unable to make many gains.
However, Friday’s hotter-than-expected employment data reversed the pairing, prompting CAD to climb against GBP.
Three Things to Watch out for This Week
- UK Inflation
On Wednesday, January’s inflation data is due to print for the UK. With CPI forecast to cool slightly, but remain in double digits, GBP could rise as pressure is exerted on the BoE.
- UK Retail Sales
UK Retail sales for January are due to print on Friday. With a decline forecast, GBP may weaken should it continue the narrative of a struggling retail sector.
- BoC Deputy Governor Beaudry Speech
The Bank of Canada’s (BoC) Deputy Governor is due to deliver a speech on Thursday. If he hints towards further tightening, CAD may strengthen.
Pound Canadian Dollar Outlook
GBP/CAD could continue to trade in a wide range over the coming week. With the latest CPI data likely to put further pressure on the BoE to continue hiking rates, Sterling may gain strength. Meanwhile fluctuating oil prices may infuse volatility into the ‘Loonie’.