Last week’s high: C$1.7980
Last week’s low: C$1.7698
Poor UK Growth Data Causes Pound to Canadian Dollar Exchange Rate Selloff
The Pound to Canadian Dollar exchange rate initially saw modest gains last week, but following Friday’s disappointing UK growth projections the Pound plunged and GBP/CAD ended the week lower.
As UK GDP growth came in at a surprisingly anaemic 0.1% quarter-on-quarter and a disappointing 1.2% year-on-year, Bank of England (BoE) interest rate hike bets plunged and investors sold the Pound. Markets no longer expect the BoE to hike interest rates in May.
The Canadian Dollar was able to hold its ground against Sterling for most of the week and easily advanced on Friday. This was because while NAFTA renegotiation talks were reportedly difficult and going slowly, investors still expect them to succeed rather than collapse.
CAD Outlook: Growth Could Help Canadian Dollar to push GBP/CAD Lower
Unless upcoming UK PMI data is particularly impressive, Bank of England (BoE) interest rate hike bets are likely to remain low and the Pound’s potential for gains is limited.
Perhaps if UK services PMI data on Thursday comes in well above expectations, investors will become hopeful that Britain’s economy is improving in Q2 2018 and this could boost BoE bets again.
However, if UK data fails to impress it is more likely that BoE comments or Brexit developments will be driving Pound movement.
GBP/CAD could see further losses in the coming week instead, especially if Tuesday’s Canadian growth report from February impresses investors. Canadian growth is forecast to have risen from -0.1% to 0.1% in February, but if it comes in higher GBP/CAD is likely to fall.
09:30 UK BoE Consumer Credit
09:30 UK Manufacturing PMI
13:30 Canadian Growth Rate
14:40 Canadian Manufacturing PMI
09:30 UK Construction PMI
UK Local Elections
09:30 UK Services PMI
13:30 Canadian Trade Balance
13:30 Canadian Ivey PMI
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