Pound to Canadian Dollar Exchange Rate Avoids Losses despite UK Coronavirus Outlook
Rising coronavirus fears are now hitting the Canadian Dollar (CAD), making it easier for the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate to recover this week’s losses. The Pound (GBP) outlook remains filled with uncertainties so its gains may be limited.
Since opening this week at the level of 1.7059, GBP/CAD has been trending with a downside bias.
GBP/CAD briefly touched on a low of 1.6907 in the middle of the week, the lowest level for the pair since the middle of September.
Since then though, GBP/CAD has rebounded. Despite coronavirus uncertainty in the Pound outlook, GBP/CAD is trending closer to the week’s opening levels again at the time of writing on Thursday.
Pound (GBP) Exchange Rates Firming on Hopes for UK Government Fiscal Policy
The UK government’s new coronavirus restrictions, announced earlier in the week, did not signal a second full lockdown as some had feared.
As a result, the Pound has been able to recover from early-week losses.
Investors continue to buy the Pound today, amid hopes that the UK government will announce new fiscal policy to support the pandemic-hit economy.
UK Chancellor Rishi Sunak will hold a winter economy plan later on Thursday. According to a source from the UK Treasury:
‘No one wanted to be in this situation but we need to respond to it,
The chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein. Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.’
Canadian Dollar (CAD) Exchange Rates Weak as Canada Hit by Coronavirus Second Wave
It’s the Canadian Dollar’s turn to be hit by a worsened coronavirus outlook. While the risk and trade-correlated Canadian Dollar was already weak on market safe haven demand and falling oil prices, Canada’s domestic situation is also weighing on the currency today.
Canadian Prime Minister Justin Trudeau said that Canada had entered a second wave of the pandemic. He said if the nation did now follow guidelines, there could be a surge in new cases.
Trudeau said:
‘We have the power to get this second wave under control. I know we can do it, because we’ve already done it once before,’
Trudeau’s government has also indicated it will ramp up fiscal stimulus and spending. Concerns that Canada’s economy could slow again made it easier for GBP/CAD to rise today.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Remains Sensitive to Coronavirus
Pound investors are anxiously awaiting UK policy news from Rishi Sunak, set for later today. If fiscal policy impresses markets the Pound is more likely to sustain gains.
Investors may remain hesitant to buy the Canadian Dollar if Canada’s coronavirus outlook remains gloomy.
However, if the current market aversion to risk softens at all, the Canadian Dollar could find some support amid hopes for Canadian fiscal policy.
Overall, the coronavirus pandemic will remain the biggest focus for GBP/CAD.
Next week will see the publication of UK and Canadian growth rate data. This as well as UK-EU Brexit developments could also influence the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook.
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