Pound to Canadian Dollar Exchange Rate Gaining Ahead of Key OPEC+ Meeting
Investors are selling the Canadian Dollar (CAD) today, which is helping the Pound to Canadian Dollar (GBP/CAD) exchange rate to recover. After seeing gains earlier in the week, investors are hesitant to keep buying CAD. This is due to uncertainty ahead of major oil developments.
Since opening this week at the interbank level of 1.74, GBP/CAD has been trending with a downside bias.
However, as the Pound (GBP) has been picking up strength again and the Canadian Dollar is slipping, the pair has recovered. At the time of writing on Thursday, GBP/CAD is trending around the week’s opening levels again.
Investors have opted to overlook Britain’s mixed outlook and buy the British currency. The oil-correlated Canadian Dollar is weak amid anxiety over an upcoming meeting between major oil producers.
Pound (GBP) Exchange Rates Benefitting from Market Sentiment despite PM’s Hospitalisation
Earlier in the week, the Pound (GBP) was hit by fresh political uncertainty. UK Prime Minister Boris Johnson was admitted to hospital on worsening coronavirus symptoms, and has spend much of the week in intensive care.
However, the Pound’s weakness was limited. In fact, the British currency has been more resilient again since yesterday. As Mr Johnson’s condition stabilises, the Pound is gaining on the market’s overall more positive mood.
Global fiscal stimulus, as well as signs that the coronavirus pandemic is slowing, are making investors less eager to hold onto safe havens.
Currencies perceived as a little riskier, like the Pound, have been more appealing again. This is helping the Pound to capitalise on rival weakness and avoid losses even as PM Johnson remains in hospital.
Canadian Dollar (CAD) Exchange Rates Dip Ahead of Anticipated OPEC+ Meeting
The Canadian Dollar (CAD) is a currency heavily correlated to prices of oil. This is because oil is Canada’s biggest export.
As a result of this correlated, CAD has been significantly impacted by plummeting oil prices in recent months. An oil price war was prompted by plunging prices amid the worsening coronavirus pandemic.
However, oil producers in the OPEC+ group are set to hold a meeting on potential oil production cuts today. Analysts are hoping that this meeting could lead to developments which will help resolve or deescalate the oil price war.
While there is optimism though, investors are hesitant to buy the Canadian Dollar too much. There is also a possibility that oil prices will plummet again if no deal is reached.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Focused on OPEC+ Meeting
The oil price war has been a huge downside factor in market appetite for commodities and risk-sentiment over the past month or so.
As a result, the OPEC+ meeting set for today could be one of this week’s most influential events.
Markets are hoping that Saudi Arabia and Russia will reach some kind of agreement on oil prices and production cuts. If oil markets improve, overall market sentiment will improve even further.
Oil-correlated currencies like the Canadian Dollar (CAD) would be set to benefit most from optimistic oil developments.
Still, if no deal is reached it could instead mean more weakness and poor performance in not just commodities but global markets. According to Stephen Innes, Chief Market Strategist at AxiCorp:
‘In contrast, another collapse would signal prolonged chaos for both the oil market and broader capital markets.’
The Pound, on the other hand, could be driven by domestic coronavirus developments. Any changes in the condition of UK Prime Minister Boris Johnson or fiscal stimulus news could cause some Pound to Canadian Dollar (GBP/CAD) exchange rate movement as well.