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GBP/CAD Gives Up Recovery as Canadian Inflation Jumps

Last week’s high: C$1.6808

Last week’s low: C$1.6597

Canadian Inflation Bolsters Canadian Dollar Demand

Towards the end of last week, the Pound to Canadian Dollar exchange rate began to recover most of the week’s losses as oil prices fell and the Pound was supported by the latest UK data.

Thursday saw the publication of Britain’s July retail sales report, which showed a surprising rebound in consumer activity thanks to warm weather, the World Cup and the strong performance of online retailers.

On top of this, the Canadian Dollar tumbled amid resilience in the US Dollar (USD), and news that a key Canadian oil pipeline had been delayed. As oil is Canada’s most lucrative commodity, this weighed heavily on the Canadian Dollar.

However, Friday’s session saw the Pound to Canadian Dollar exchange rate slump again. Not only did the Pound continue to be weighed by broad concerns about how a ‘no deal’ Brexit could impact Britain’s economy, but Canada’s latest Consumer Price Inflation (CPI) inflation rate report was much higher than expected.

As Canadian inflation printed above expectations, Bank of Canada (BoC) interest rate hike bets rose and the Canadian Dollar pushed GBP/CAD lower again.

CAD Outlook: Canadian Retail Sales and Trade Developments in Focus

The Canadian Dollar’s strong-streak could continue in the coming days, as Brexit concerns persist and the Pound is unlikely to find much notable support in this week’s relatively low-influence UK ecostats.

If Bank of Canada (BoC) interest rate hike bets remain high and upcoming Canadian data impresses, the Pound to Canadian Dollar exchange rate could be in for another week of losses.

This week’s most notable ecostats will be Tuesdays Canadian wholesale sales results, and Wednesday’s June retail sales report.

Canadian retail sales are likely to be particularly influential, and if Canadian consumer activity surprises investors the Canadian Dollar could see a shift in demand.

Any further developments in North American Free Trade Agreement (NAFTA) renegotiations, oil prices or general US trade protectionism news could also influence the Canadian Dollar in the coming week.

 

Key Events

21st August

09:30 UK Public Sector Net Borrowing

11:00 UK CBI Industrial Trends Orders

13:30 Canadian Wholesale Sales

22nd August

13:30 Canadian Retail Sales

23rd August

11:00 UK CBI Distributive Trades

24th August

09:30 UK Finance Mortgage Approvals

 

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To keep up to date with the Canadian Dollar, visit the CAD blog in our Currency News section.

 

Alastair Archbold 

Currency Dealer

 

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