The Pound-Canadian Dollar rate could remain under pressure if Canadian GDP rebounds strongly and lifts Bank of Canada rate hike expectations.
The Pound to Canadian Dollar (GBP/CAD) exchange rate ticked lower last week as a fresh rise in oil prices bolstered the ‘Loonie’.
At the time of writing, the GBP/CAD exchange rate traded at CA$1.8754. Down around 0.2% from the start of last week’s session.
DAILY RECAP:
The Canadian dollar (CAD) edged higher last week with the commodity-linked currency drawing support from a renewed surge in oil prices.
Brent crude rose to around $94 a barrel last week as the 60-day memorandum of understanding between Washington and Tehran expired without a final peace deal or an agreed extension, reinforcing concerns that the disruption to energy supplies could persist.
In terms of domestic data, the Canadian Dollar was seemingly unfazed by a stronger-than-expected inflation print and sizable contraction in Canadian retail sales.
The Pound (GBP) put in a mixed performance last week, with the currency fluctuating against most of its rivals amid a flurry of high-impact UK economic data.
A mixed batch of releases left investors struggling to gauge the next move from the Bank of England (BoE). Weaker employment figures followed by an unexpected acceleration in inflation weighed on Sterling during the first half of the week, as the conflicting signals complicated the outlook for interest rates.
The Pound then attempted to regain ground, only for the recovery to falter after a sharp decline in UK retail sales and a shock rise in UK government borrowing last month.
Near-Term GBP/CAD Forecast: Rebound in Canadian GDP to Boost the ‘Loonie’?
Looking to the week ahead, the primary catalyst of movement for the Pound to Canadian Dollar (GBP/CAD) exchange rate is likely to be the publication of Canada’s latest GDP data.
Consensus estimates predict Canadian GDP will have rebounded strongly in the second quarter, lifting the country out of the technical recession it slipped into in the first quarter of the year.
This in turn could improve the odds of the Bank of Canada (BoC) delivering an interest rate hike later in the year, boosting the appeal of the ‘Loonie’.
Meanwhile, a relatively quiet UK economic calendar should leave Sterling largely dependent on wider risk appetite and developments across global markets.
Our currency coverage draws on live market data, official economic releases and published bank research.
