The Pound Canadian Dollar (GBP/CAD) exchange rate climbed toward the end of last week, despite the Bank of England (BoE) leaving interest rates unchanged.
What’s Been Happening: Pound Shaken as BoE Keeps Rates Held
Tepid trade limited the Pound (GBP) at the beginning of last week’s session, as GBP contended with a lull in data.
The light calendar continued through the middle of the week’s session, as investors looked toward the BoE’s impending rate decision. Markets had priced in another pause, which limited GBP demand.
As expected, the BoE kept interest rates at 5.25%, with a minority voting for a further hike. While this created perceptions of a ‘hawkish hold’, the accompanying forward guidance painted a bleak picture of the UK’s economy. Infusing volatility into Sterling.
This continued through till Friday, wherein the Pound began to soar. Market sentiment improved, which saw the increasingly risk-sensitive Sterling strike multi-month highs against its peers.
Meanwhile, the Canadian Dollar (CAD) wavered throughout the week, amid volatile oil prices and mixed economic data.
The Canadian economy was found to have stalled in September, which dented CAD exchange rates on Tuesday.
In the interim, a lack of impactful data releases saw the crude-sensitive ‘Loonie’ trade in tandem with fluctuating oil prices.
On Friday, the ‘Loonie’ crashed after the publication of October’s unemployment figures, after the jobless rate climbed higher than forecast.
Three Things to Watch Out for This Week
- UK GDP
The UK’s third quarter GDP data is due out on Friday. Economists forecast a 0.1% contraction on a quarterly basis, which could weigh heavily on GBP.
- BoC Summary of Deliberations
The Bank of Canada’s (BoC) latest summary is scheduled for release on Wednesday. If this contains hawkish hints, CAD could strengthen.
- CA Balance of Trade
This afternoon, Canada’s latest trade data is due to print, which could strengthen CAD if the surplus expanded as forecast in September.
Pound Canadian Dollar Forecast
The GBP/CAD exchange rate could see additional volatility over the week, due to a light data calendar. If oil prices continue to fluctuate, GBP/CAD could seesaw over the week.