Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as Oil Prices Sink
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate edged higher this morning. This left the pairing trading at around CA$1.7482.
The oil-sensitive ‘Loonie’ remained under pressure on Monday as oil prices sunk to levels not seen since 2002.
Prices slumped on fears the coronavirus pandemic would cause oil demand to plummet and the Saudi Arabia-Russia price war continued to threaten to overload the market.
Commenting on this, Neil Wilson of Markets.com noted:
‘The thing to stress is that we simply do not have any idea when demand will recover – it could take months to get back to some semblance of normality. And just as this is happening the Saudis are opening the spigots. It’s getting to the point where we run out of places to store the oil.’
Despite the increase in monetary and fiscal action from governments and central banks across the globe, oil prices have continued to suffer in recent months.
Commenting on this, Rakuten Securities’ commodity analyst, Satoru Yoshida noted:
‘Central banks have been easing [monetary policy] and governments have been offering stimulus packages, but they are only supportive measures, not radical treatments
‘Until we see signs of the pandemic ending, oil prices will stay under presser and could dive below $20 a barrel.’
Sterling (GBP) Rises despite Credit Ratings Downgrade
The Pound edged higher against the Canadian Dollar as the coronavirus pandemic remained firmly in focus for investors.
However, Sterling began to suffer losses against the US Dollar (USD) as traders began to flock back to the safety of USD.
Added to this, the country’s economic outlook received a further blow after a credit ratings downgrade.
Fitch, a ratings agency cut the UK’s sovereign debt raying on Friday, after noting that the country’s debt levels would increase as the government ramped up its spending due to the coronavirus pandemic.
Commenting on this, Jane Foley, currency strategist at Rabobank in London said:
‘The fundamentals suggest Sterling is vulnerable.
‘One of the interesting parts of the [Fitch] downgrade was pointing not just to the worsening of public finances but also the Brexit element, pointing to concerns about the UK’s trade agreement with the EU.’
Pound Canadian Dollar Outlook: Oil Prices and Consumer Confidence in Focus
Looking ahead, the Pound (GBP) could slump against the Canadian Dollar (CAD) following the release of British consumer confidence data.
If GfK reveal that March’s confidence slumped further than expected, Sterling will slump.
However, the pairing is likely to remain flat if oil prices continue to suffer sharp losses.
If oil prices continue to suffer losses as the coronavirus pandemic and the Saudi Arabia-Russia price war rages on, the Pound Canadian Dollar (GBP/CAD) exchange rate will remain flat.