Pound to Canadian Dollar Exchange Rate Slips from Best Levels amid Oil Rally
The Pound to Canadian Dollar (GBP/CAD) exchange rate is slipping from its best levels this morning, but both currencies remain strong. Coronavirus vaccine hopes are boosting oil prices, supporting the Canadian Dollar (CAD) and limiting the Pound’s (GBP) resilience.
After opening last week at the level of 1.7181, GBP/CAD briefly dipped before bouncing higher. The pair spent the week climbing, ultimately closing the week at the level of 1.7328 – over a cent higher.
This morning saw GBP/CAD briefly near Friday’s 2-month-best of 1.7354. However, at the time of writing GBP/USD is trending below the week’s opening levels near the level of 1.7290, as oil prices support CAD.
It’s possible that pivotal Brexit developments this week could notably improve the Pound outlook and leave the pair climbing even higher.
Pound (GBP) Exchange Rates Slip despite Hopes for Brexit Breakthrough
The Pound has been one of the better-performing major currencies in recent weeks. The Pound outlook has been boosted by expectations that a coronavirus vaccine could hugely help Britain’s economy, as well as rising hopes for UK-EU Brexit deal.
Last week, Brexit hopes rose even further as Brexiteer Dominic Cummings quit his UK government adviser role. It boosted hopes that the UK government could be more willing to aim for a softer Brexit.
Despite this though, bearish bets on the British currency are rising today, which is causing Sterling to slip.
Analysts at ING among those concerned that the outcome of Brexit talks could cut it dangerously close:
‘While we see officials suggesting more than one week may still be needed, the technical time for ratification in the EU and UK is dangerously shrinking,
In light of this, we could see both parts rushing into a deal already this week.’
Canadian Dollar (CAD) Exchange Rates Benefitting from Rallying Oil Prices
The Canadian Dollar is a currency often correlated to market risk and trade sentiment. In particular, it often sees strong correlation with prices of oil, due to oil being Canada’s most lucrative export.
Prices of oil have been mixed in recent weeks. Surging coronavirus cases in America and Europe are weighing on oil amid concerns of a long period of low oil demand. On the other hand, coronavirus vaccine hopes rising has definitely boosted oil and limited its losses.
This week, oil is once again rising. Hopes for a vaccine to boost oil demand next year are offsetting concerns about the current impact of the virus, at least for now.
As a result, the Canadian Dollar is being buoyed slightly today. It is helping CAD to register gains against a slightly weaker Pound.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Outlook to Shift on Brexit and Oil Developments
The Pound to Canadian Dollar (GBP/CAD) exchange rate is slipping today, but the outlook still remains quite positive.
Whether or not it holds recent highs though, depends largely on how the Brexit process unfolds in the coming weeks.
If the UK and EU present a deal this week and show signs that it will be agreed, the Pound outlook could end up much higher.
As for the Canadian Dollar, it will be focused on oil prices. Analysts are still cautious on the oil outlook, so this could limit the strength of oil and the Canadian Dollar going forward. According to the International Energy Agency (IEA):
‘It is far too early to know how and when vaccines will allow normal life to resume,
For now, our forecasts do not anticipate a significant impact in the first half of 2021.’
Comments from Bank of England (BoE) and Bank of Canada (BoC) officials, as well as upcoming retail sales stats, could also influence the Pound to Canadian Dollar exchange rate outlook.