Canada’s economy is hurting as citizens curb their spending, but the Canadian dollar is gaining some ground against the British pound.

The US dollar is losing a little strength this week, giving the Canadian dollar a chance to breathe and make progress in other currency pairings. The CAD/GBP pairing is up 0.051%, though the CAD/USD pairing has dropped 0.067% over the last 24 hours.

Look for Tuesday’s domestic inflation report to see more movement there. With Canada’s struggling economy, the Canadian dollar could really use some good news on the inflation report.

As the GBP/CAD airing declines, the Canadian dollar is showing resiliency and benefiting from its link to the US dollar. The two currencies are very closely connected, as the power of the US dollar will buoy the Canadian dollar, partly due to their close geographic and political ties.

Canadian Economic Factors to Watch

Canadians are buckling down and spending less money on goods, as some areas of retail have become very expensive. School supplies skyrocketed 24% last year, and while prices have not gone up much since then, they have not declined much either. The country is still feeling the impact of the pandemic, although the solution does not seem to be worsening.

There are complaints of price gouging all over, and customers are looking for competitive pricing and doing more of their shopping online because of unfair prices in their area. Online shopping allows them to check prices and compare them quickly even among physical retailers so that they get the best deals.

Interest rate cuts could be coming in the near future. The Canadian government decided not to cut rates in its last meeting on the topic, but it could cut rates in the coming months. Watch the US economy for movement in the Canadian dollar as well, as the two economies will complement and support one another with their close, constant trading.