Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Falls on Unexpected Rise in Retail Sales
UPDATE: The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate traded -0.7% lower this afternoon, leaving the pairing trading at around CA$1.7464.
On Tuesday afternoon, data from Statistics Canada showed that retail sales rose more than expected.
February’s monthly sales rose by 0.3%, providing the ‘Loonie’ with a boost.
Meanwhile, Sterling sentiment remained under pressure as the currency suffered losses against the ‘Loonie’. GBP also fell near its lowest level in almost two weeks against both the US Dollar (USD) and Euro (EUR).
Investors continued to flock back to the safe-haven USD and according to Jane Foley, FX strategist at Rabobank:
‘Inward investors are skeptical of any political or potential political disruption.
‘Given that the economy will be in a recession this year because of the crisis, given that a huge amount of workers have been furloughed, I think there’s increased skepticism that the UK government will have the procedures in place in January next year to deal with a whole new system.
‘Brexit has just been overlaid on top of the bigger factor about Dollar demand.’
Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as US Oil Prices Sink Below $0
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained flat this morning, leaving the pairing trading at around CA$1.7593.
The oil-sensitive ‘Loonie’ suffered some losses earlier after US oil prices sunk below $0 for the first time on Monday.
CAD firmed against the Pound as oil prices edged back into positive territory on Tuesday. Although, international benchmark Brent oil slumped as Covid-19 hurt demand for crude.
Edward Moya, senior market analyst at broker OANDA noted:
‘Demand destruction from COVID-19 will see a slower than expected reopening of the US economy.
‘The WTI crude June contract was able to hold the $20 a barrel level and is seeing a modest gain following the painful rollover of the May contract.’
Faced with lower global oil demand, OPEC+ agreed to cut output by 9.7 million barrels per day, however this will not take place before May.
Added to this, the size of the cut is not seen as big enough to restore balance to oil markets, leaving the ‘Loonie’ under pressure.
Sterling (GBP) Flat as Employment Data Shows ‘Softening Picture’ Ahead of Lockdown
On Tuesday, official data showed that the number of Britons in work grew more slowly in February compared to the previous month.
It is likely this is an early sign of what’s to come due to the coronavirus lockdowns.
The Office for National Statistics (ONS) also showed the number of employees on companies’ payrolls slowed in March. From 1.1% in February to 0.8% last month.
According to David Freeman, a labour market statistician at the ONS:
‘These experimental statistics show a softening picture in March, but cover the month as a whole including the period before the coronavirus restrictions were in place.’
Added to this, the ONS reported an increase in the number of unemployment benefit claims. Claims rose by 12,100 in March, although this was far below the forecast of 172,500.
Although, the newly released claims data reflects the situation on 12 March, before the lockdown on 23 March.
Pound Canadian Dollar Outlook: Canadian Retail Sales in Focus
Looking ahead to this afternoon, the Canadian Dollar (CAD) could suffer losses against the Pound (GBP) following the release of Canadian retail sales data.
If February’s sales slumps, showing shoppers were cautious before the coronavirus pandemic, the ‘Loonie’ will edge lower.
Meanwhile, on Wednesday Sterling could give up some of today’s gains following the release of March’s inflation data.
If inflation disappoints, falling further than expected in March it could leave the Pound Canadian Dollar (GBP/CAD) exchange rate flat.