The Pound to Canadian Dollar (GBP/CAD) exchange rate traded in a narrow range last week as investors balanced UK political developments against stronger Canadian inflation and softer oil prices.
At the time of writing, GBP/CAD was trading at CA$1.8755, little changed on the week.
Pound to Canadian Dollar (GBP/CAD): 1.87384
Euro to Canadian Dollar (EUR/CAD): 1.6161
Dollar to Canadian Dollar (USD/CAD): 1.41946
DAILY RECAP:
The Pound (GBP) proved resilient last week, with Sterling holding steady despite Prime Minister Keir Starmer’s resignation.
The move had already been largely priced in by GBP investors, meaning the announcement did little to unsettle the UK currency. Markets also took comfort from Starmer’s decision to outline a clear timetable for an orderly handover of power.
At the same time, a number of senior Labour figures opted not to launch leadership bids, instead throwing their support behind newly elected MP Andy Burnham. This fuelled expectations of a quick succession process, with Burnham’s likely ‘coronation’ as Prime Minister helping to ease fears of a drawn-out leadership battle.
Meanwhile, the crude-linked Canadian Dollar (CAD) fluctuated on Monday, amid some volatility following a tense start to US-Iran peace talks.
Oil prices then began to trend lower, but CAD was bolstered by a hotter-than-forecast Canadian inflation print, which boosted bets on a possible Bank of Canada interest rate hike.
The ‘Loonie’ then continued to waver through much of the week, as competing pressures saw the currency fluctuate in a narrow range.
While falling oil prices pressured CAD, the ‘Loonie’ was supported by its positive correlation with the US Dollar (USD), as the American currency strengthened.
Near-Term GBP/CAD Forecast: UK and Canadian GDP Figures in Focus
Looking ahead, Tuesday’s final UK GDP figures for the first quarter could offer the Pound some support, if they confirm that the economy gathered momentum at the start of the year.
However, Sterling may struggle later in the week if Friday’s final services PMI shows a steeper contraction in the UK’s all-important services sector.
UK political developments may also continue to influence GBP. Investors remain focused on speculation over Andy Burnham’s potential Chancellor pick, and what this could mean for the government’s fiscal direction.
Meanwhile, Canada’s latest GDP figures could support the ‘Loonie’, if they show a rebound in growth in May.
Oil price movements could also influence CAD. The Canadian Dollar may be subdued if crude prices remain soft.
