GBP/CAD Exchange Rate Rangebound as UK Struggles to Keep a Lid on Coronavirus
The Pound to Canadian Dollar (GBP/CAD) exchange rate is muted at the start of this week as coronavirus cases in the UK remain elevated.
At the time of writing the GBP/CAD exchange rate is trading at around CA$1.6965, virtually unchanged from this morning’s opening rate.
Pound (GBP) Faces Losses Unless UK Gets Control Over its Coronavirus Outbreak
While most of Europe appears to have their coronavirus outbreaks well under control, in the UK struggles to bring down its numbers look to be putting pressure on the Pound (GBP).
While new cases are down significantly from their peak back in April, this decline has slowed to a crawl in recent weeks amidst renewed concerns over commodity transmission.
Scientists are even suggesting that the R number –the rate at which the virus reproduces- could be close to climbing back above 1 in some areas of the UK.
Professor John Edmunds, a scientist advising the government on its coronavirus response warns there is still ‘an awful long way to go’ before the pandemic will be over in the UK and there is a clear risk that the disease could ‘come back very fast’ if the UK ‘relaxes its guard’.
This is likely to weigh heavily on Sterling sentiment as it would be a major setback for the government’s plans to reopen the UK economy, with Boris Johnson previously warning further easing of lockdown measures would be dependent on the UK getting a grip on the outbreak.
Canadian Dollar (CAD) to Climb amid Sustained Oil Rally?
Meanwhile, the Canadian Dollar (CAD) may find support though this week’s session if oil prices continue to maintain their upward trajectory.
WTI crude prices are currently nearing $40 a barrel for the first time since early March after the OPEC cartel and Russia agreed to extend oil production cuts until the end of July.
Since the oil prices have more than doubled over the last two months after OPEC and Russia agreed to cut production by a record 9.7 million barrels a day, a move which has effectively slashed global supplies by almost 10%.
Demand for oil has collapsed amid the coronavirus pandemic, concerns over which briefly turned WTI oil prices negative for the first time in history back in April.
However as more countries begin to emerge from lockdown this demand has already begun to return, much to the relief of oil producers and commodity linked currencies such as the Canadian Dollar.
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