GBP/CAD Exchange Rate Rangebound, Oil Prices Recover on Russia-Saudi Deal Hopes
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady this morning, with the pairing currently trading around CA$1.753.
The oil-sensitive Canadian Dollar rebounded from this week’s lows after US President Donald Trump said that he expects Saudi Arabia and Russia to secure a deal to end the current price war.
Speaking at a White House Press Conference, Mr. Trump said:
‘It’s very bad for Russia, it’s very bad for Saudi Arabia. I mean, it’s very bad for both. I think they’re going to make a deal.’
The ‘Loonie’ benefited after the global benchmark, Brent, rose by over 10% while the West Texas Intermediate (WTI) increase by over 9%.
Canada is the fourth largest oil exporting nation, after the US, Saudi Arabia and Russia. Oil also provides nearly 10% of Canada’s annual GDP. Consequently, rising oil prices have bolstered the Canadian Dollar, and if prices continue to increase, we could see the CAD/GBP exchange edge higher.
Canadian Dollar (CAD) investors will be awaiting today’s publication of Canada’s International Merchandise Trade report for February. Any signs of improvement could buoy the ‘Loonie’ to Pound exchange rate as early as this afternoon.
The Pound (GBP) Steadies as UK Markets Remain Jittery on Dim UK Economic Outlook
The Pound (GBP) held steady against the Canadian Dollar (CAD) today as markets continue to assess the health of the British economy as the coronavirus and nationwide lockdown continue to limit business activity.
This week saw the Centre for Business and Economic Research (CEBR) predicted that the UK’s GDP could plummet by 15% between this year’s first and second quarters due to the impact of the coronavirus.
The CEBR commented also stated:
‘Our central assumption is that restrictions on businesses and the wider populations will be loosened by the third quarter as testing becomes more widely available.’
The GBP/CAD exchange rate has been propped up by growing hopes for a delay to the UK-EU Brexit negotiations, however, which has increased the odds that the two could secure a trade deal going forward.
However, with markets predicting an economic fallout bigger than 2008’s economic crisis, the Pound’s gains against the ‘Loonie’ are likely to be compromised in the coming weeks.
GBP/CAD Forecast: Oil Prices to Drive ‘Loonie’ Strength
Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK Markit Services PMI. Any signs of this sinking deeper into contraction would prove Pound-negative.
Oil prices will continue to drive the GBP/CAD exchange rate this week, with any further signs of a deal between Russia and Saudi Arabia boosting prices and sending the ‘Loonie’ upwards.