The Pound Canadian Dollar (GBP/CAD) exchange rate traded erratically through the week as volatile oil prices offset a dovish rate hike from the Bank of England (BoE).
What’s Been Happening: GBP/CAD Exchange Rate Fluctuates as BoE Raises Rates to Highest Since 2008
The BoE met forecasts and raised interest rates by 25bps to 4.5%, the highest level since 2008. However, a dovish accompanying statement and press release sent Sterling spiralling. BoE Governor Andrew Bailey commented that they expect inflation to fall rapidly from April, paring bets for future rate hikes.
End of the week and mixed GDP growth data failed to lift the Pound. First quarter growth met expectations and expanded 0.1%. However, monthly economic growth unexpectedly declined by 0.3% in March, dragging Sterling lower.
Meanwhile, the Canadian Dollar (CAD) also struggled for demand at the start of the week as WTI crude prices fluctuated wildly amid a volatile market mood. Oil prices failed to rise above $74 a barrel as fears of slowing global growth weighed on demand.
Midweek and the ‘Loonie’ managed to recoup some of its losses with a strengthening US Dollar (USD). The positive correlation the Canadian Dollar shares with the ‘Greenback’ saw the former climb as safe-haven flows resumed amid a downbeat market mood.
However, with oil prices remaining turbulent, and little economic data, the Canadian Dollar ended the week under pressure.
Three Things to Watch Out for This Week
- Canadian Inflation Rate
CAD could stumble as headline CPI is predicted to cool to 4.1%, marking the fifth consecutive month of easing inflation.
- BoE Speeches
BoE Governor Andrew Bailey is scheduled to talk; if he remains dovish, the Pound could stutter.
- Canadian Retail Sales
Another month of declining retail sales could dent CAD, highlighting another month of waning consumer activity.
Pound Canadian Dollar Forecast
Elsewhere, the commodity-linked ‘Loonie’ will continue to be heavily influenced by oil prices. If WTI crude fails to stabilise, the Canadian Dollar could be in for another tough week.