GBP/CAD Exchange Rate Rangebound, Canadian Dollar Recovers as China’s Coronavirus Fears Ease
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.706 as a rise in global oil prices on easing concerns over China’s coronavirus outbreak have helped the trade-correlated ‘Loonie’ to recover.
This follows yesterday’s stronger-than-expected Canadian inflation report, which rose from 0% to 0.3% and buoyed optimism in the Canadian economy.
Josh Nye, Senior Economist at the Royal Bank of Canada, commented:
‘[Canada’s inflation report] was slightly stronger than what we were expecting before. The increase in gasoline prices, this time a year ago prices were falling, so that was a factor and the headline increased. Prices for fresh goods apparently rose as well, despite disruption in other countries.’
Ongoing concerns China’s coronavirus continues to hold back some of the Canadian Dollar’s (CAD) gains, however, with fears that the epidemic could weaken the global supply chain and negatively impact Canada’s trade-reliant economy.
GBP/CAD Exchange Rate Steady, Post-Brexit UK-EU Concerns Weigh on Sterling
The Pound (GBP) struggled to gain on the ‘Loonie’ despite today’s better-than-expected UK retail sales figure for January, which edged higher from -0.5% to 0.9%, their fastest rise since March 2019.
Karen Johnson, Head of Retail at Barclays Corporate Bank, offered a more uncertain picture for the British economy going ahead, however, commenting:
‘January’s [Office for National Statistics] figures offer a glimmer of hope that this pent up consumer demand could now slowly be being released, but the jury is still out on this at the moment.’
Brexit continues to drag on the GBP/CAD exchange rate today following comments from David Frost, the UK’s Chief Brexit negotiator. Mr Frost has insisted that the UK would not be seeking alignment with the EU, and would resist complying with the bloc’s rules post-transition period.
Stefaan De Rynck, the senior advisor to the EU’s Brexit negotiator, also added that talks between the two sides were likely to be ‘rather difficult, a comment which has exacerbated fears of a no-deal on trade later on this year.
GBP/CAD Forecast: Rising Oil Prices Could Boost the Canadian Dollar
Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK Markit Services PMI. Any signs of improvement in the UK’s largest sector could provide a boost for the GBP/CAD exchange rate.
Canadian Dollar (CAD) traders will be awaiting tomorrow’s release of December’s Canadian retail sales report, which is expected to ease from 0.9% to 0.1%. However, if the gauge falls below forecast we could see the ‘Loonie’ weaken on concerns for Canada’s economic health.
We could see the Canadian Dollar rise on increasing oil prices, however, and with any further signs of a lull in fears over China’s coronavirus outbreak, we could see the GBP/CAD exchange rate begin to sink.