The Pound-Canadian Dollar could come under pressure if UK jobs data disappoints, while firm oil prices may continue to support the Loonie.
The Pound to Canadian Dollar (GBP/CAD) exchange rate wavered on Monday as rising oil prices and softer Canadian inflation impacted the pairing.
At the time of writing, GBP/CAD was trading at CA$1.8762, virtually unchanged on the day.
Pound to Canadian Dollar (GBP/CAD): 1.876999 (+0.03%)
Euro to Canadian Dollar (EUR/CAD): 1.607211 (-0.11%)
Dollar to Canadian Dollar (USD/CAD): 1.39181 (+0.34%)
DAILY RECAP:
The crude-linked Canadian Dollar (CAD) initially firmed as this week’s trade began as escalating tensions in the Middle East triggered a rise in oil prices.
Over the weekend, Yemen’s Iran-backed Houthi rebels intensified their attacks on Saudi Arabian energy infrastructure, fuelling fears that the crisis could spiral out of control.
However, the ‘Loonie’ struggled to sustain its upside following slightly softer-than-forecast Canadian inflation figures.
Most notably, key inflation measures tracked by the Bank of Canada (BoC) remained close to target, dampening any bets that the Canadian central bank might take a more hawkish approach.
The Pound (GBP) traded without a clear direction on Monday, as Sterling remained cautious ahead of a busy week for the UK economy. With little domestic data likely to drive movement at the start of the week, attention instead turned to the series of releases and events still to come.
The week’s main highlights include the latest UK labour market figures, consumer price index, Bank of England (BoE) interest rate decision and retail sales data.
With so many potential market-moving events on the horizon, GBP traders appeared unwilling to make bold moves. As a result, the Pound remained relatively subdued as the week began.
Near-Term GBP/CAD Forecast: British Jobs Report to Undermine GBP?
Looking ahead, Tuesday’s UK employment figures could set the tone for Sterling, as traders look to the latest data for a clearer picture of conditions across the labour market.
Unemployment is forecast to tick up from 4.9% to 5% in the three months to July, while wage growth including bonuses is expected to have eased over the same period.
If the figures point to a softening jobs market, the Pound could come under additional pressure, particularly with the Bank of England’s interest rate decision due later in the week.
As for the Canadian Dollar, a lack of domestic data could leave the ‘Loonie’ to trade on oil price dynamics. If oil remains strong, CAD could attract support.
Our currency coverage draws on live market data, official economic releases and published bank research.
