GBP/CAD Exchange Rate Edges Higher as Canadian Economic Outlook Darkens
The Pound to Canadian Dollar (GBP/CAD) exchange rate saw an uptick today, with the pairing currently trading around CA$1.68.
The Canadian Dollar (CAD) suffered today after Canada’s economy saw its biggest ever monthly contraction, with the nation’s GDP shrinking by 11.6% in April. This was the most on record, with the coronavirus pandemic weighing on the Canadian economy more-than-expected.
Analysts at Reuters commented:
‘Canada’s growth in April plunged … from March as swaths of the economy were shut down to curb the spread of the coronavirus.’
However, StatsCan said that a flash estimate for May could reveal a rebound to 3% as businesses and stores across Canada began to reopen.
Nevertheless, this was not enough to buoy the ‘Loonie’ today, with concerns growing over Canada’s economic recovery.
Canadian Dollar (CAD) investors are also remaining cautious today after oil prices dropped on fears on a possible return of Libyan oil production.
Tamas Varga of oil brokerage PVM also commented:
‘Attempts to push prices higher are capped by growing concerns about the second cycle of the coronavirus or the inability to contain the current one.’
As a result, the oil-reliant Canadian economy looks set fur further complications going forward.
Pound (GBP) Rises as BoE Provide Cautious Optimism as Chief Economist Sees V-Shaped Recovery for Britian
The Pound (GBP) edged higher today after the Bank of England’s (BoE) chief economist, Andy Haldane, gave reason or cautious optimism after saying that the UK was looking at a V-shaped economic recovery.
Mr Haldane also commented:
‘Both the UK and the global economies are already well into the “second quarter” – the recovery phase. The UK’s recovery is more than two months old, while the global economy is perhaps three months into its recovery, in both cases from an exceptionally low starting point.’
Today also saw the UK hit by its sharpest fall in growth in 41-years, leaving many GBP traders concerned for the British economy going forward.
The UK’s GDP figure for the first quarter fell below forecasts from -2% to -2.2%.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, commented on the report:
‘The biggest contraction for 40 years, even though Q1 contained just nine lockdown days.’
However, GBP investors have been focusing on post-Brexit developments as UK-EU trade negotiations continue.
Nonetheless, with no signs of a breakthrough, markets are remaining cautious over fears that the UK could fail to secure a trade deal by the December 31st deadline.
GBP/CAD Outlook: Could a Positive UK Manufacturing PMI Buoy Sterling?
The Canadian Dollar (CAD) could begin to edge higher tomorrow as Canadian markets close for the bank holiday Canada Day.
Any signs that oil prices could improve over the course of today and tomorrow would also prove CAD-positive.
Sterling investors will be awaiting tomorrow’s release of the UK Manufacturing PMI for June. If this shows any signs of improvement, then we could see the GBP/CAD exchange rate edge higher.