Pound to Canadian Dollar Exchange Rate Slumps on Hopes for Oil Production Cuts
Updated 16:17 BST 02/04/2020:
The Canadian Dollar (CAD) finally found more solid footing on Thursday afternoon. Developments in the oil price war, tweeted by US President Donald Trump, led to a surge in oil prices and the oil-correlated Canadian Dollar.
This invitation comes within framework of the Kingdom's constant efforts to support the global economy in this exceptional circumstance, and in appreciation of the US President's request and the US friends' request.#SPAGOV
— SPAENG (@Spa_Eng) April 2, 2020
According to the comments, Saudi Arabia and Russia have agreed to cut oil production by at least 10m barrels. Prices of Brent crude oil surged a massive 30% after the news.
GBP/CAD tumbled below the key level of 1.75 on Thursday afternoon as a result.
However, whether the Canadian Dollar continues to benefit from this news depends on if oil producers continue to take measures to help the oil industry recover from the price war. GBP/CAD could quickly rise again if a deal falls through and oil prices plunge once more.
(Originally published 11:17 BST 02/04/2020)
Pound to Canadian Dollar Exchange Rate Struggling to Hold Gains amid Oil Hopes
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending higher this week. However, the pair has been unable to hold its best levels and was knocked back today. Oil prices jumped slightly which is supporting the oil-correlated Canadian Dollar (CAD).
Last week saw a huge 6 cent jump for GBP/CAD. The Pound (GBP) rebounded strongly while the Canadian Dollar continued to be throttled by tumbling oil prices and market risk-aversion.
Since opening this week at the interbank level of 1.74, GBP/CAD has been trending with an upside bias. Its gains have been limited though, only briefly touching a three-week-high of 1.77 on Tuesday.
Today the Canadian Dollar is seeing fresh support due to a slight rebound in oil prices. This is keeping pressure on GBP/CAD and the pair is trending in the interbank region of 1.75 at the time of writing.
Sterling has been benefitting from rival weakness. However, if oil prices continue to rise on hopes for positive developments in the oil production industry, the Canadian Dollar could begin to mount a very strong recovery.
Pound (GBP) Exchange Rates Appealing despite Lack of Fresh Support
Investors have continued to buy the Pound (GBP) this week, despite a lack of fresh support for the British currency.
Sterling’s gains have been more due to weakness in rival currencies like the Euro (EUR) and US Dollar (USD). Improved liquidity in global markets due to stimulus efforts have helped Sterling to sustain a recovery from its worst levels.
However, the Pound’s appeal has thinned this week. Investors are hesitant to buy the British currency too much as Britain’s coronavirus situation continues to worsen.
Britain’s Office for National Statistics (ONS) published its first weekly coronavirus update today. The data may be more watched by markets going forward.
We’ve published our first weekly faster indicator data covering the economy and society in response to the #coronavirus pandemic.
Some of the metrics in this publication will become regular releases, while others will be one-off pieces of analysis https://t.co/1t7ZdHYna7 pic.twitter.com/qIHwHwOHma
— Office for National Statistics (ONS) (@ONS) April 2, 2020
Canadian Dollar (CAD) Exchange Rates Boosted as Oil Prices Rebound
The Canadian Dollar (CAD) has been one of the weakest major currencies on markets amid the coronavirus pandemic.
Oil prices have been throttled by the outbreak and this even sparked a price war between oil producers. As the Canadian Dollar is strongly correlated to oil prices, this has led to months of terrible performance for the currency.
As a result, today’s notably rebound in oil prices is helping CAD slightly. This was due to a comment from US President Donald Trump, suggesting he was hopeful for the oil price war to come to an end.
He said:
‘I have confidence in both that they’ll be able to work it out,’
While the oil price rebound of around 10% may be temporary, it was enough to boost CAD for now. It could be even more impactful if it continues.
Pound to Canadian Dollar (GBP/CAD) Exchange Rates Could See Further Losses
Analysts speculate that the Pound’s (GBP) current strength may not last. The British currency is gaining on rival weakness but unless the domestic coronavirus outlook improves its bullishness could come to an end soon.
Pound investors are hoping for more fiscal stimulus from the UK government. If stimulus improves the Pound is more likely to keep climbing.
On the other hand though, a lack of impressive action or some highly concerning UK services PMI data tomorrow could put fresh pressure on the British currency.
If market demand for the Canadian Dollar rebounds more strongly, this would also drag GBP/CAD down.
If there are any solid optimistic developments in oil markets, the Canadian Dollar is more likely to mount a solid recovery.
The Pound to Canadian Dollar (GBP/CAD) exchange rate is unlikely to be driven much by February’s Canadian trade report today.