Pound Canadian Dollar Exchange Rate Jittery as Both Currencies Weaken
The Pound (GBP) and Canadian Dollar (CAD) have both been broadly appealing lately, but the Pound Canadian Dollar (GBP/CAD) exchange rate is seeing limited movement this week as both currencies fall back from highs.
Last week’s GBP/CAD movement was mixed as both currencies strengthened instead. GBP/CAD opened last week at the level of 1.7367 and closed a little lower in the region of 1.7350.
GBP/CAD also touched on a two month low of 1.7259 last week and has been trending near those lows this week so far. At the time of writing though, GBP/CAD is once again trending near the week’s opening levels.
Amid a lack of major Canadian data due this week, Pound to Canadian Dollar exchange rate movement will be driven more by UK data and shifts in oil prices and market sentiment.
Pound (GBP) Exchange Rates Lack Drive as UK-EU Vaccine Tensions Weight
Sterling movement has been more mixed this week so far, as the British currency is supported by the latest UK job market data but weighed by the latest UK-EU trade concerns.
Britain’s January job market report beat forecasts, and the nation’s key unemployment rate unexpectedly improved to 5.0%.
Despite this though, concerns that the EU could potentially block coronavirus vaccine shipments to the UK have been weighing on Sterling.
This and a drop in market risk-sentiment are causing some investors to rethink if the Pound’s recent rallies and highs have been justified. Essentially, the jittery market is hesitant to keep buying Sterling.
Canadian Dollar (CAD) Exchange Rates Pause on Market Sentiment, Oil Prices
The Canadian Dollar’s own strong streak, which has overpowered the Pound’s and seen significant GBP/CAD losses in recent weeks, is also pausing for the time being.
Concerns about rising coronavirus infections in some major economies are hitting market sentiment and commodity prices. This includes prices of oil, Canada’s biggest export.
Amid speculation that the Eurozone could be about to see stricter coronavirus lockdowns and restrictions again, perceived oil demand is tumbling. This is one of the factors weighing on CAD today.
According to Analysts at Commerzbank:
‘Continental Europe is tightening the coronavirus measures and thereby further restricting mobility,
This is likely to have a correspondingly negative impact on oil demand,’
Pound Canadian Dollar (GBP/CAD) Exchange Rates Could Slump if UK Data Disappoints
The latest coronavirus vaccine jitters have weighed on the market’s Pound bullishness and is causing some to re-evaluate Sterling strength. Unless upcoming UK data impresses investors, the Pound may not be able to extend its recent bullishness.
Tomorrow will see the publication of Britain’s latest inflation rate results and March PMI projections from Markit. The PMIs will be the focus, as they will give investors the clearest image yet of how Britain’s economy has been performing over the past month.
Later in the week, UK retail sales results will also be closely watched. A shock downturn in UK economic activity might have a big impact on the Pound’s appeal.
As for the Canadian Dollar, analysts predict that it may not have seen the end of its bullish run just yet. According to Mazen Issa, Senior FX Strategist at TD Securities:
‘We are not seeing price action in the CAD space that suggests the hot streak in the Canadian Dollar is coming to an end. If anything I think it is probably going to be a beneficiary of US outperformance as far as the economy is concerned,’
Amid a lack of notable Canadian data due in the coming sessions, the Pound Canadian Dollar (GBP/CAD) exchange rate will be driven by UK data, market sentiment and oil prices.