The Pound Canadian Dollar (GBP/CAD) exchange rate wavered throughout last week as concerns over a European banking crisis weighed on market sentiment.
What’s Been Happening: GBP/CAD Exchange Rate Fluctuates amid Financial Sector Woes
The Pound started the week trading without a clear direction as the collapse of Silicon Valley Bank (SVB) spooked investors.
Meanwhile, mixed employment data struggled to lift Sterling as wage growth slowed for the first time in a year. Average earnings, excluding bonuses, fell to 6.5% from a year earlier, pointing to a cooling labour market. However, unemployment held at 3.7%, limiting losses.
Midweek, Chancellor Jeremy Hunt delivered the Spring Budget, along with the Office for Budget Responsibility’s (OBR) upwardly revised economic forecasts. Optimism of the UK avoiding a recession was offset by fears of continually tumbling living standards.
Meanwhile, the Canadian Dollar (CAD) struggled for demand throughout the week amid a lack of major economic data.
Tumbling oil prices kept a firm lid on the ‘Loonie’ throughout the week. Amid a turbulent market mood, WTI crude failed to climb above $70 a barrel, as prices plunged 5% on the week, the lowest in a year.
Three Things to Watch Out for This Week
- Canada & UK Inflation
Despite an expected easing for both, UK inflation is still set to remain just under double digits, far above the BoE’s target rate of 2%. Red-hot inflation could force the BoE to continue its rate hikes, buoying the Pound.
- BoE Interest Rate Decision
Amid the banking sector crisis, growing expectations of a pause in the tightening cycle could drag Sterling lower if the BoE halts its monetary policy.
- UK Retail Sales
Sales are predicted to increase 0.2% MoM, pointing to a second straight month of growth in the retail sector. Any signs of the economic recovering could boost Sterling.
Pound Canadian Dollar Forecast
Elsewhere, the UK’s flash PMIs could influence the Pound. Despite an expected slip in the service sector, the reading is set to remain in expansionary territory, potentially keeping Sterling supported.