Pound Canadian Dollar Weekly Outlook: Key GBP/CAD Risk Canadian GDP
The Pound Canadian Dollar (GBP/CAD) exchange rate fluctuated last week following the publication of several economic data releases from both the UK and Canada.
At the time of writing GBP/CAD traded at around CA$1.7937, virtually unchanged from Friday’s opening rate.
The Pound (GBP) began the week mostly muted against the majority of its counterparts.
However, it saw a slight rise on Tuesday after the release of the UK’s latest labour index. The data highlighted an acceleration in wage growth and a lower-than-expected unemployment rate.
Despite these positive indicators, the Pound’s gains were capped when Bank of England (BoE) Governor Andrew Bailey cautioned about a ‘weak growth environment.’
On Wednesday, the UK released its latest consumer price index (CPI), showing headline inflation had risen to 3%.
Despite this increase, the Pound remained on the back foot as the data did not significantly impact expectations for an interest rate cut by the Bank of England.
The week concluded with a mix of economic data from the UK.
The latest retail sales index and services PMI surpassed market expectations, while the manufacturing index fell below the expansion line.
The Canadian Dollar (CAD) began the week trapped in a narrow range against its counterparts as a lack of domestic data releases saw
the ‘Loonie’ struggle to find a clear direction.
However, on Tuesday, the Canadian Dollar firmed against the majority of its peers following the publication of Canada’s latest consumer price index.
The index revealed that both headline and core inflation warmed more than expected in January, which served to undermine Bank of Canada (BoC) interest rate cut bets.
However, mid-week trade saw the ‘Loonie’ relinquish the bulk of its gains as a downturn in oil prices weighed on the crude-linked currency.
At the end of the week, Canada released its latest retail sales index, which increased much more than expected and marginally supported the Canadian Dollar.
Looking ahead, the primary factor influencing the Pound Canadian Dollar exchange rate this week will likely be Canada’s latest GDP reading on Friday, amid a sacristy of UK and Canadian data releases throughout the week.
Should the data reveal a downturn in the latest GDP index, CAD exchange rates could experience fresh headwinds at the end of the week.
In the meantime, the GBP/CAD exchange rate will likely be driven by market risk appetite, with any upbeat trading conditions potentially bolstering the exchange rate.
Adam Solomon
Contributing Analyst
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