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GBP/CAD Exchange Rate to Retain Upside as Mini Budget Comes Under Pressure?


GBP/CAD Exchange Rate Sees Uptick as Kwarteng Meets with IMF

The Pound Canadian Dollar (GBP/CAD) exchange rate is strengthening today as Chancellor Kwasi Kwarteng meets with the International Monetary Fund (IMF).

At the time of writing the GBP/CAD exchange rate is trading at around €1.1374, which is roughly up 0.2% from this morning’s opening rate. 

Pound (GBP) to Fall as Investors Focus on Kwarteng’s IMF Meeting?

The Pound (GBP) is trading in a broad range against most of its peers this morning as investors focus on Kwasi Kwarteng’s meeting with IMF.

Kwarteng is meeting with IMF today to reassure them that the mini budget will boost UK economic growth. This comes after August’s GDP figures printed worse than forecast, with growth sliding from 0.1% to -0.3%.

Many economists believe the Chancellor’s borrowing plans are unsustainable. With fiscal concerns continuing to infuse volatility into the Pound.

Meanwhile GBP investors are also wary of Ofgem’s warning of potential energy shortages this winter.

Ofgem’s chief executive, Jonathan Brearley, is expected to announce the regulator’s public information campaign on Thursday. This campaign is expected to focus on consumers cutting their energy intake to help ease energy demand.

With UK data thin on the ground today, GBP investors will likely turn to bleak domestic headlines to guide trading, which could cause further volatility in the Pound.  

Canadian Dollar (CAD) to Weaken Further as Oil Prices Slump?

The Canadian Dollar (CAD) is struggling to find support this morning as a slump in oil prices has made investors cautious.

At the time of writing WTI crude oil is trading around $87 per barrel.

This follows a 6% decline in crude prices since the start of the week. The Organization of the Petroleum Exporting Countries (OPEC) slashed global demand forecasts on Wednesday. This decision was underpinned by stalling economic growth and higher inflation.

According to OPEC, oil demand will drop by about 460,000 barrels per day for the remainder of 2022 and 360,000 bpd in 2023.

In a statement by OPEC said:

‘The world economy has entered into a time of heightened uncertainty and rising challenges, amid ongoing high inflation levels, monetary tightening by major central banks, high sovereign debt levels in many regions as well as ongoing supply issues’.

A lack of significant data today will likely see CAD exchange rates remain linked to oil price dynamics. If oil prices slip in today’s trading session, then this will likely weigh on the oil-linked ‘Loonie’.

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