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Pound Canadian Dollar (GBP/CAD) Exchange Rate Rangebound as Oil Prices Continue to Slump

GBP/CAD Exchange Rate Steady as Canadian Markets Await Unemployment Rate Report for June

The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.71.

The Canadian Dollar (CAD) failed to gain on Sterling after oil prices have continued to slump on growing fears of a second wave of coronavirus setting back the American economy.

With the US being the world’s largest importer of oil, this has weighed on the oil-reliant Canadian economic outlook.

Alex Kimani, an analyst at OilPrice.com, commented:

‘The coronavirus pandemic has caused global oil demand to fall off a cliff, with U.S. consumption falling to levels last seen nearly four decades ago. With global oil production at record highs, supply quickly overwhelmed demand leading to an acute storage crunch that triggered the historic oil price crash into negative territory.’

In Canadian economic news, today will see the release of the latest unemployment rate report for June. If the figure confirms consensus and eases from 13.7% to 12%, then we could see CAD edge higher.

Today will also see the release of Canada’s average hourly wages figures for Jun. Any signs of improvement would prove CAD-positive.

Pound (GBP) Steady as UK Gyms, Pools, and Nail Bars are Set to Reopen

The Pound (GBP) held steady against the ‘Loonie’ today despite pools, gyms and nail bars set to reopen in England as the Covid-19 lockdown eases.

Today saw the British Retail Consortium (BRC) report a significantly lower figure of UK shoppers despite the reopening of shops in June.  

Helen Dickinson, chief executive of the BRC, commented on the report:

‘[U]nless footfall returns to UK streets, Government must be prepared to step in and take further action to boost demand, such as widening the VAT cut to include retail goods.’

Meanwhile, fears for the British economy have risen after the ratings agency Moody’s said that it expects UK GDP to contract by 10.1% this year. As a result, GBP investors are becoming more concerned that the British economy could face a more severe downturn than previously expected.

GBP/CAD Outlook: Could a Dovish BoE Weigh on Sterling Next Week?

Pound (GBP) investors will be looking ahead to Monday’s speech by Andrew Bailey, the Governor of the Bank of England (BoE). Any dovish comments about the British economy would prove GBP-negative.

Monday will also see the release of the BRC Like-for-Like Retail Sales figures for June. If the UK’s retail sales improved last month, we could see the GBP/CAD exchange rate edge higher.

The Canadian Dollar (CAD) will remain sensitive to oil prices next week. Any signs that these continue to drop would prove CAD-negative.

The GBP/CAD exchange rate will remain sensitive to Brexit developments next week. If the UK and the EU make any progress towards a trade agreement, then we could see Sterling soar.