The Pound Canadian Dollar (GBP/CAD) exchange rate oscillated last week, as downbeat economic data restricted Sterling.
What’s Been Happening: Pound Weakens as PMIs Miss Forecasts
At the beginning of last week, the Pound (GBP) began in a muted fashion, with a lack of data limiting Sterling’s movement.
Tuesday saw the Pound drop, following the release of the UK’s October flash PMIs. Both the service and manufacturing sectors saw further contractions, sparking recession anxieties amongst GBP investors.
Furthermore, the release led to pared back Bank of England (BoE) interest rate hike bets, amid signs of economic fragility.
Sterling’s weakness was furthered by a downbeat retail sales report from the Confederation of British Industry (CBI) on Thursday.
Friday saw GBP exchange rates trade largely sideways, as a lack of data sapped sentiment toward Sterling.
Meanwhile, the Canadian Dollar (CAD) saw a muted week of trade amid volatile oil prices. Initially, prices began to wane, dragging the crude-sensitive ‘Loonie’ lower.
However, on Tuesday CAD saw some gains due to its close correlation with the US Dollar (USD). But this was undermined by inaction from the Bank of Canada (BoC), which once again kept interest rates paused.
Towards the end of the week’s session, the ‘Loonie’ struggled to attract support as oil prices continued to weaken.
Three Things to Watch Out for This Week
- BoE Interest Rate Decision
The Bank of England is widely expected to keep rates unchanged on Thursday, which may cause GBP to drop.
- Canadian GDP
Later today, Canada’s GDP data is forecast to show a stall in September, which could dent CAD.
- Canadian Unemployment Rate
Canadian unemployment data for October is due to release on Friday, with analysts expecting an uptick in the jobless rate. This could hamper the ‘Loonie’ if it prints as expected.
Pound Canadian Dollar Forecast
The GBP/CAD exchange rate could see additional turbulence on Friday, following the print of the final UK services PMI. If this prints in line with the preliminary data, confirmation of further weakness in the vital sector could limit Sterling’s appeal.