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Pound to Canadian Dollar Recovery Limited by Poor UK Ecostats

Last week’s high: C$1.7365

Last week’s low: C$1.7123

Canadian Dollar Gains versus Sterling Despite Weaker Oil Prices

The Pound to Canadian Dollar exchange rate recovered from its worst levels towards the end of last week, but still saw losses overall as the Pound was held back by poor UK data.

Brexit uncertainties, as well as an unexpected slowdown in UK inflation and underwhelming UK growth projections gave investors little reason to buy the Pound throughout the week. As a result, even a weaker Canadian Dollar was able to register some gains.

The Canadian Dollar saw strong performance earlier in the week, as investors sold the US Dollar (USD) from its best levels and prices of commodities. Including oil, strengthened.

However, as oil is Canada’s most lucrative commodity, falling crude prices dragged CAD lower towards the end of the week. A Friday recovery in the US Dollar also weakened the Canadian Dollar and helped GBP/CAD to end the week closer to opening levels than its lows.

Canadian Dollar investors have also been anxious about NAFTA renegotiations and the possibility of auto tariffs, as the US government has launched an investigation into car and truck imports. Canada is a major exporter of vehicles to the US.

CAD Outlook: Bank of Canada and Canadian Growth Results Ahead

Next week’s UK economic calendar will be a little quieter, but with a slew of influential Canadian ecostats due the Canadian Dollar is likely to drive GBP/CAD movement regardless.

Depending on upcoming Canadian news, the CAD outlook could improve. The Bank of Canada (BoC) is not expected to make any changes to monetary policy in its policy decision on Wednesday, but if the bank hints at monetary policy changes in the second half of 2018 the Canadian Dollar could strengthen.

Economists currently predict that as price pressures firm, the BoC will hike Canadian interest rates two times in the second half of the year.

Of course, Canadian data will need to remain optimistic for the BoC to want to hike Canadian interest rates. As a result, next Thursday’s Canadian growth results from Q1 and March could also be highly influential.

The Pound is likely to react to Brexit developments. It’s worth noting that global geopolitical and trade news will continue to drive the Canadian Dollar as well.

Key Events

30th May

13:30 Canadian Current Account

15:00 Bank of Canada Policy Decision

31st May

UK Gfk Consumer Confidence

09:30 UK BoE Consumer Confidence

09;30 UK Mortgage Lending and Approvals

13:30 Canadian Growth Rate

1st June

09:30 UK Manufacturing PMI

14:30 Canadian Manufacturing PMI

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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 Trader
T: 01442 892 066

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