The Pound Canadian Dollar (GBP/CAD) exchange rate was mixed last week amid conflicting data and market volatility.
The pairing closed the week at around CAD$1.7151.
Pound (GBP) Exchange Rates Fluctuate amid UK Economic Concerns
The Pound (GBP) strengthened against its safer peers on Monday amid a risk-on rally, sparked by renewed hopes of a Middle Eastern ceasefire. The increasingly risk-sensitive currency enjoyed some investor support, though fell elsewhere against its riskier rivals.
On Tuesday, a shifting market sentiment saw Sterling retreat from its cheery wins, as gloomy trade dented GBP against its safe-haven competitors. A lack of notable UK data served to leave GBP rudderless as the session drew to a close.
Following this, the UK’s finalised manufacturing PMI fell below market projections on Wednesday, printing at 49.1 in April. The index marked a return to contraction territory after a brief upturn in March, quelling short-lived hopes that conditions within the UK’s manufacturing sector were beginning to improve after an extended period of stagnancy.
Thursday saw markets look towards the Organisation for Economic Co-operation and Development (OECD) latest growth outlook. With fresh data in short supply, Sterling sentiment soured as the Paris-based thinktank slashed its growth expectations for the year ahead, lowering estimates to 0.4% in 2024.
In addition to this, the OECD estimated that the UK economy would be the worst-performing out of its G7 peers throughout the remainder of the year.
On Friday, GBP was the able to regain some ground as the UK’s finalised services PMI surprised to the upside, reaching its highest level since May 2023 last month and printing at 55.
Canadian Dollar (CAD) Fluctuates amid Mixed Data
The Canadian Dollar (CAD) traded without a clear direction as the week opened, faltering against its stronger rivals amid a lack of fresh Canadian data and subdued oil prices.
On Tuesday, the ‘loonie’ then tumbled against its rivals as the latest Canadian GDP report fell below market expectations. The Canadian economy grew by 0.2% in February, falling below market forecast of 0.3% and dipping from the previous month’s upwardly revised 0.5% expansion. Concerns of economic declaration saw investors ponder the direction of upcoming Bank of Canada (BoC) monetary policy updates, ultimately deterring investor interest as the session progressed.
In addition to this, a decline in crude oil prices added to the oil-driven Canadian Dollar’s downside. Oil prices continued to falter on Wednesday, applying some light pressure to CAD exchange rates.
Thursday saw CAD post some modest gains against its weaker rivals, despite slightly worse-than-forecast domestic trade data and flat oil prices.
As the week drew to a close, Canada’s S&P Global services PMI printed above forecast at 49.9 in April. However, signs of improvement in the vital sector were offset by disappointing US jobs data. Due to CAD’s positive trading correlation with the <a href=”https://www.exchangerates.org.uk/US-Dollar-USD-currency-table.html”>US Dollar</a> (USD), a tumbling ‘greenback’ prevented the ‘loonie’ from gaining any significant ground as the session closed.
Pound Canadian Dollar Exchange Rate Forecast: Canadian Inflation in Focus
Coming up, the latest Canadian Ivey PMI is due for release on Tuesday. Forecast to edge marginally lower to 56.8 in April, could signs of economic slowing hamper CAD exchange rates?
Looking to the UK, the Bank of England’s (BoE) latest interest rate decision is due on Thursday, and will be the key driver of GBP movement.
While markets widely anticipate that the BoE will keep interest rates on hold, any accompanying guidance may be pulled into focus. Should policymakers strike dovish, indicating imminent monetary unwinding in the summer months, GBP could tumble against its stronger rivals.
