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Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rangebound as Oil Prices Plummet on Covid-19 Fears

Canadian Dollar Currency Forecast

GBP/CAD Exchange Rate Steady as Oil Prices Fall

The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.730.

The Canadian Dollar (CAD) suffered today after oil prices fell to a four-month low as fears of further lockdowns – throughout much of Europe and elsewhere – could come into force in the next few weeks.

As a result, the commodity-linked ‘Loonie’ has struggled as oil is one of Canada’s largest exports. Any further

Bjarne Schieldrop, chief commodities analyst at SEB, commented:

‘US crude and product inventories moved away from the five-year normal last week, with no improving trend in implied demand – now down 2.3 m bl/day year-on-year. It could be a tough time for oil in the months ahead until a Covid-19 vaccine liberates markets.’

The Canadian Dollar (CAD) has also continued to suffer from yesterday’s dovish forecasts from the Bank of Canada (BOC) for the Canada’s economy.

Although the BoC held interest rates at 0.25%, it acknowledged that global economic activity had slowed in the fourth quarter, posing a risk for Canada’s trade reliant economy.

The BoC also commented that ‘rising COVID-19 infections are likely to weigh on the economic outlook.’

Pound (GBP) Steady as UK-EU Brexit Talks Head to Brussels

The Pound (GBP) held steady today as David Frost, the UK’s Chief Negotiator, heads to Brussels to continue post-Brexit trade talks.

Consequently, GBP investors are becoming more confident that we will hear positive developments towards a trade deal within the next few weeks.

A spokesman for Downing Street said:

‘There is also much work to be done if we’re going to bridge what are the significant gaps that remain between our positions in the most difficult areas and time is very short.’

In UK economic data, today saw the release of September’s UK Mortgage Approvals, which shot up to 91.454 thousand.

Andrew Montlake, managing director of mortgage broker Coreco, commented:

‘The post-lockdown bull run is already over. Lenders have been pulling down the shutters due to ongoing struggles with capacity and concerns over rising unemployment levels, specifically the impact on house price growth.’

However, with Covid-19 infections rising nationwide – and rising in the south – we could see Sterling struggle as Britain’s economic outlook deteriorates.

GBP/CAD Forecast: Could Post-Brexit Trade Developments Boost Sterling?

Canadian Dollar (CAD) investors will be awaiting tomorrow’s release of August’s final Canadian GDP figure. If this falls below consensus, then the CAD/GBP exchange rate would suffer as Canada’s economy struggles.

The oil-sensitive CAD will also remain sensitive to the price of oil. If this continues to fall, then the ‘Loonie’ will suffer.

The GBP/CAD exchange rate could head higher before the weekend, however, if UK-EU trade talks show any progress towards a post-Brexit trade deal.