GBP/CAD Exchange Rate Softens as Oil Hits Three-Week High
The Pound Canadian Dollar (GBP/CAD) exchange rate is weakening today amid UK political turmoil as oil prices touch three-week highs.
At time of writing the GBP/CAD exchange rate is around $1.5375, falling by 0.40% from this morning’s opening rates.
Pound (GBP) Undermined by Falling Confidence in UK Economy
The Pound (GBP) is struggling against its major rivals today in the wake of a tumultuous Conservative Party conference mired by infighting and a divided Tory party.
The return of political uncertainty could deter investors once again as a YouGov poll showed that Prime Minister Liz Truss is already less popular than both Boris Johnson and Jeremy Corbyn ever were.
After the highly contentious mini-budget that saw markets crash and confidence evaporate, credit agency Fitch have downgraded their credit outlook for the UK. The £45bn unfunded fiscal package, unveiled by Chancellor Kwasi Kwarteng, could cause the government borrowing spiralling, plunging the economy into further disarray. Fitch said:
‘The large and unfunded fiscal package announced as part of the new government’s growth plan could lead to a significant increase in fiscal deficits over the medium term.’
Looking ahead, the Pound could see further bumps in the road as a lack of data will leave it exposed to worsening domestic woes. Any further developments in the Bank of England’s (BoE) intervention or the government’s fiscal plans could weigh on Sterling.
Canadian Dollar (CAD) Wavers amid Global Economic Downturn Fears
The Canadian Dollar (CAD) is enjoying mixed success today as oil prices climbed to the highest levels in three weeks. After the Organisation of the Petroleum Exporting Countries (OPEC+) met in Vienna, the group agreed to slash output by 2 million barrels per day, and subsequently the price of oil climbed.
However, despite the move pushing the price of oil, the move was made in response to global recession fears which could drive oil demand down. Amidst the worsening energy situation in Europe, as well as global recession fears weighing on Asian manufacturing hubs, the slashing of supplies could also benefit Russia.
Looking ahead, and the Canadian Dollar could see a surge in demand thanks to the OPEC+ oil output slash. If oil prices continue to climb, so will the commodity-linked ‘Loonie’.
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