The Pound Canadian Dollar (GBP/CAD) exchange rate traded in wide boundaries last week, amid dovish comments from Bank of England (BoE) Chief Economist Huw Pill.
What’s Been Happening: Pound Volatile amid Dovish BoE Comments
Mixed trade struck the Pound (GBP) at the start of last week’s session. Investors looked to cash in on Sterling’s strength brought on by risk-on trade.
On Tuesday, dovish comments from BoE Chief Economist Huw Pill exerted further pressure. Pill suggested that interest rate cuts by summer 2024 were possible, which dented GBP.
Sterling traded in wide boundaries on Wednesday, as a lack of data releases left the currency exposed to market volatility.
On Thursday, Pill stated in a speech that further tightening wasn’t needed to bring inflation to heel. This dampened GBP exchange rates as it prompted investors to further diminish their tightening bets.
Friday saw the Pound struggle following the publication of the UK’s third-quarter GDP data. While the UK economy managed to avoid a downturn, growth stagnated over the quarter, sparking recession concerns.
Meanwhile, the Canadian Dollar (CAD) largely traded in line with oil prices last week. Prices consistently fell through the beginning of the week, dragging the crude-linked ‘Loonie’ lower.
However, they managed to stabilise on Thursday, cushioning CAD exchange rates. Although, the ‘Loonie’ fluctuated on Friday, as while oil had recovered somewhat, it remained sharply lower over the week.
Three Things to Watch Out for This Week
- UK Inflation
The UK’s consumer price index for October is due to print tomorrow. Could cooling inflation dent BoE bets and drag GBP lower?
- UK Retail Sales
October’s UK retail sales figures are due, with forecasts of a 0.3% increase on the cards. Could a recovery in the sector lift the Pound?
- Canadian PPI
On Friday, Canada’s latest PPI release is forecast to have cooled to 0.3% on a monthly basis, which may weaken the ‘Loonie’.
Pound Canadian Dollar Forecast
The GBP/CAD exchange rate could see mixed trade through the week, as investors mull the morning’s UK labour data. While the unemployment rate beat forecasts, wage growth cooled which could prompt a readjustment of BoE tightening bets.