GBP/CAD Exchange Rate Rises as Falling Oil Prices Weigh on the Canadian Dollar
The Pound to Canadian Dollar (GBP/CAD) exchange rate edged higher by 0.1% today, with the pairing currently trading around CA$1.752.
The Canadian Dollar (CAD) has continued to suffer from tumbling crude oil prices after WTI crude fell as low as just $14 a barrel early into this week’s trade.
Joshua Mahony, a Senior Analyst at IG, comments:
‘Oil prices have hit a 20-year low this morning, with a clear distinction between US crude and Brent crude forming as stockpiles fill up.’
‘[Furthermore], the lack of demand and landlocked nature of production in the US and Canada has already started to provide negative prices across a number of crude products in North America.’
Earlier in April, OPEC members agreed on a record deal to cut global output by 10% to fight tumbling demand and in-fighting between other major oil producers.
However, Stephen Innes, the Chief Global Market Strategist at Axicorp, echoed many ‘Loonie’ investors concerns when he said:
‘It hasn’t taken long for the market to recognise that the Opec+ deal will not, in its present form, be enough to balance oil markets.’
With the export of crude oil representing over 10% of Canada’s exports, the dwindling price of oil is having a directly negative effect on the oil-sensitive Canadian Dollar today.
Pound (GBP) Edges Higher Despite ‘Second Peak’ Covid-19 Fears
The Pound (GBP) rose against the weaker Canadian Dollar (CAD) despite rising fears over the UK’s number of coronavirus cases as Britain enters another week of its lockdown, which was extended by a further three weeks last week.
Prime Minister Boris Johnson has also expressed fear over the possibility of a ‘second peak’ of the virus should the UK prematurely ease its lockdown measures.
Plaid Cymru Westminster Leader Liz Saville Roberts commented:
‘If the lockdown is lifted in one nation or region because it has passed the ‘peak’ not only will we see confusion, but the potential movement of people around the UK which in turn could lead to greater infection rates and more importantly unnecessary pressures on local healthcare services.’
In UK economic news, today saw the release of April’s IHS Markit Household Finances Index fall to its lowest since 2011, with the gauge dropping to 34.9.
GBP/CAD Forecast: Could Easing UK Cvoid-19 Cases Boost Sterling?
Pound (GBP) investors will be paying close attention to tomorrow’s release of February’s UK ILO Unemployment Rate report. Any signs that unemployment was high even before the UK’s coronavirus crisis would weaken the GBP/CAD exchange rate.
The Canadian Dollar (CAD), meanwhile, will remain sensitive to oil prices this week. If oil prices continue to fall, it is unlikely that the ‘Loonie’ will recover against the Pound.
The GBP/CAD exchange rate could begin to edge higher this week if the UK’s coronavirus cases show signs of plateauing, as this would heighten the chances that the nationwide lockdown could be eased in the coming weeks.
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