The Pound Canadian Dollar (GBP/CAD) exchange rate climbed over the past seven days. The pairing found support from Bank of England (BoE) rate hike bets. GBP/CAD also saw gains as oil prices fell over the past seven days.
What’s Been Happening: Pound’s Gains Limited by Evidence of Cooling Inflation
The Pound (GBP) was bolstered by persistent BoE rate hike bets at the opening of last week. Markets continued to price in a 25bps interest rate raise from the central bank at their next meeting. This helped to underpin GBP/CAD.
Additionally, the rate hike sentiment was strengthened by hawkish comments from BoE Chief Economist Huw Pill on Tuesday.
However, GBP/CAD moved in a limited range on Tuesday after a sharp jump in crude oil prices. The Canadian Dollar (CAD) strengthened after the announcement of a cut in oil output from the OPEC+ group.
The pairing’s gains were capped by evidence of cooling UK inflation, though. The final reading of March’s PMI for the services sector indicated that inflationary pressures for businesses were easing. This dampened BoE rate hike bets and weighed on Sterling.
GBP/CAD edged lower at week’s end amid thin trading conditions for GBP. The pairing also came under pressure after an upbeat Canadian employment report.
- UK GDP
The UK economy is forecast to have expanded by 0.1% in February. Will evidence the UK has avoided a recession bolster GBP?
- BoE Bailey Speech
Markets will be looking for any signals from Governor Andrew Bailey regarding the BoE’s forward path. Will the Pound be boosted by any hawkish comments?
- BoC Interest Rate Decision
The Bank of Canada (BoC) is expected to leave interest rates unchanged on Tuesday. Will the cautious stance weigh on CAD?
Sterling could see losses over the coming week due to fresh industrial action in the UK. Meanwhile, CAD could be affected by its positive correlation to the US Dollar (USD) this week. Oil price dynamics may also prompt movement in the ‘Loonie’.