Pound to Canadian Dollar Exchange Rate Recovery Limited as Canadian Outlook Strong
The Canadian Dollar (CAD) has seen weaker performance this week so far, making it easier for the Pound to Canadian Dollar (GBP/CAD) exchange rate to climb. Weak oil prices and coronavirus jitters are weighing on CAD appeal.
Brexit concerns knocked GBP/CAD from the interbank level of 1.72 to 1.71 last week. However, coronavirus jitters weighed on the Canadian Dollar towards the end of the week. This helped the pair to avoid lows of 1.70.
GBP/CAD has been recovering gradually so far this week. GBP/CAD currently trends in the region of 1.72 again, but the pair’s gains have been limited.
The Canadian Dollar is benefitting from weakness in rival currencies, as well as speculation that oil prices could see some improvement soon. Oil is Canada’s biggest export, so CAD is often correlated to oil prices.
Pound (GBP) Exchange Rates Driven by Rivals as it Avoids Coronavirus Panic for Now
After tumbling yesterday, the Pound (GBP) is seeing a rebound today. Rather than this being due to any notable developments in UK data or Brexit though, Sterling is being driven by movement in rivals.
Yesterday’s Pound losses were largely caused by safe haven demand, causing a US Dollar (USD) surge. Today’s recovery is due to the US Dollar shedding much of yesterday’s strength.
Concerns over the coronavirus and its potential impact on the global economy are hitting many major currencies lower. This includes the US Dollar, the Euro (EUR) and the Canadian Dollar (CAD).
For the time being though the panic has had little influence on Britain’s economic outlook. This is leaving the Pound more appealing than rival currencies.
Canadian Dollar (CAD) Exchange Rate Resilience Mixed as Oil Prices Fluctuate
The Canadian Dollar (CAD) is a little more appealing than other major currencies today. This is despite CAD being correlated to risk and trade, and being driven lower by concerns over the global impact of the coronavirus.
Yesterday the Canadian Dollar was generally unappealing. Speaking on yesterday’s movement, Scott Smith from Viewpoint Investment Partners said:
‘We’re seeing the Loonie get sold off and tread water as a result of the ongoing concerns around what further spread of the coronavirus looks like for global growth,
I think the BoC will be ready to act if necessary and it becomes a more long and drawn-out situation.’
However, while these concerns persist the Canadian Dollar has steadied slightly today. This is because of market hopes that prices of oil, Canada’s most lucrative commodity, could recover.
Markets await an upcoming OPEC meeting. Hopes that OPEC could discuss new measures to boost oil prices have helped the commodity to recover slightly after weeks of losses on coronavirus jitters.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate to Focus on Coronavirus until Friday Data
The Canadian Dollar (CAD) has been a little more resilient to coronavirus this week than some other major currencies. Its reactions are largely driving GBP/CAD.
The Pound (GBP) has yet to see much reaction to coronavirus developments. Amid a lack of notable UK data due in the coming sessions, Sterling will be driven more by rival movement or potential Brexit developments.
Canada’s economic calendar is also fairly quiet until Friday. Friday will see the publication of Canada’s key growth rate results.
Until then, developments in the coronavirus and oil prices will drive the Canadian Dollar’s movement. If concerns over global growth worsen or if oil prices see fresh losses, the Canadian Dollar could come under further pressure.
Overall, unless coronavirus concerns soften or oil prices improve, the Pound to Canadian Dollar (GBP/CAD) exchange rate could continue to gradually advance.