Pound to Canadian Dollar Exchange Rate Firms as CAD Pulls Back Ahead of OPEC Decision
Updated 16:51 BST 08/04/2020:
Despite a lack of strong fresh news supporting the Pound (GBP), the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate advanced this afternoon.
Investors sold the Canadian Dollar (CAD) amid market uncertainty, ahead of tomorrow’s anticipated OPEC oil producer meeting.
Analysts believe there is more strength ahead for CAD, but markets may be hesitant to buy too much into the currency with potential for major oil news tomorrow.
If there is positive progress in the oil price war, the Canadian Dollar’s recovery is likely to be extended.
Pound (GBP) investors, on the other hand, will likely remain focused on the condition of UK Prime Minister Boris Johnson, who at the time of writing is still in intensive care.
(Originally published 11:12 BST 08/04/2020)
Pound to Canadian Dollar Exchange Rate Flounders amid Lack of Big Developments
A lack of shifts in the Pound (GBP) outlook in recent sessions has left the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate floundering. Driven more by the Canadian Dollar’s (CAD) brief bursts of strength lately, the pair continues to see mixed movement.
The Canadian Dollar has seen especially mixed movement in recent weeks. GBP/CAD was ultimately unable to sustain gains last week as CAD suddenly began to gain ground towards the end of the week.
Since opening this week at the level of 1.7437 last week, GBP/CAD has been trending lower due to higher market demand for the Canadian Dollar.
At the time of writing, GBP/CAD is trending near the level of 1.7286 – over a cent below the week’s opening levels. This is also near yesterday’s lows, which were the worst levels for the pair since late-March.
Pound (GBP) Exchange Rates Lack Drive as Boris Johnson Remains in Hospital
Investors have been hesitant to move too much on the Pound this week. The British currency’s outlook has been especially cloudy as UK Prime Minister Boris Johnson has been hospitalised for coronavirus symptoms.
It was previously confirmed that Mr Johnson had contracted the coronavirus, but his symptoms worsened this week. Mr Johnson has been in intensive care since Monday evening.
Market jitters over Mr Johnson’s health and the stability of Britain’s government have kept the Pound outlook murky. The Pound hasn’t been hit too hard by the news, but investors are hesitant to buy the British currency or move much on it in general.
According to Viraj Patel, Global FX and Macro Strategist at Arkera:
‘We’ve seen a couple of knee-jerk moves lower on the headlines over PM Johnson being in hospital. But these have faded quickly, with the short squeeze and positioning adjustment in high-beta currencies dominating FX markets,’
Canadian Dollar (CAD) Exchange Rate Appeal Softens as Markets Await Oil News
Last week saw the Canadian Dollar rebound from its worst levels. The commodity-correlated currency jumped as investors reacted to news that oil prices had finally climbed after months of huge losses.
Investors bought oil again amid news that Saudi Arabia and Russia would finally negotiate oil production cuts. This led to hopes that the oil price war could finally come to an end.
While negotiations have been delayed and oil price recovery generally limited, the Canadian Dollar has sustained most of the recovery it has seen in the past week.
It is currently expected that OPEC will hold a meeting tomorrow. Anticipation for this meeting is helping the Canadian Dollar to hold its ground, even as market risk-sentiment has been dampened a little today.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Oil News
The Pound and Canadian Dollar outlooks remain highly sensitive to coronavirus developments.
However, the Pound outlook is limited and could remain murky until there is some more solid development on the health of UK Prime Minister Boris Johnson.
If Mr Johnson recovers smoothly from his coronavirus symptoms, the Pound could see more sturdy performance. Sterling would also benefit more from market sentiment.
Overall though, GBP/CAD movement is more likely to be driven by the Canadian Dollar and oil prices.
The biggest event this week for CAD investors will be tomorrow’s OPEC meeting. If oil producers are able to reach some agreement on prices and production cuts, prices of the commodity could surge and this may give CAD an even stronger boost.
CAD may have plenty of potential for gains if its oil support improves. As a result, the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook could fall even lower.