Rising Oil Prices Sink Pound to Canadian Dollar (GBP/CAD) Exchange Rate

GBP/CAD Exchange Rate Falls as ‘Loonie’ Rises on Improving Oil Prices

The Pound to Canadian Dollar (GBP/CAD) exchange rate fell by -0.3% as the commodity-linked ‘Loonie’ was buoyed by rising oil prices. The pairing is currently trading around CA$1.733.

Today saw oil prices rise as US stockpiles rose less-than-expected while gasoline stocks fell. As a result, this buoyed hopes that oil demand will continue improve as Europe and a number of US cities move to ease their coronavirus lockdown restrictions.

Lachlan Shaw, the Head of Commodity Research at the National Australia Bank of Melbourne, commented:

‘The other thing coming through is more detail and a louder groundswell towards plans for removing COVID restrictions, particularly in Europe – in countries like Spain, France, Austria and Switzerland. That’s going to see demand pick up.’

However, Canada’s coronavirus death rate continues to rise despite a slowing rate of infections. Consequently, this has clipped some of the ‘Loonie’s gains today as markets become concerned over the nation’s handling of Covid-19.

Dr. Theresa Tam, Canada’s Chief Public Health Officer, comments:

‘We are seeing the tragic paradox of the epidemic playing out.’

‘As the epidemic comes under control, and the growth of cases slows, the severe outcomes and deaths continue to accrue, as Covid-19 takes a heavy toll among highly susceptible populations.’

Pound (GBP) Falls as UK Businesses Struggle Amid Coronavirus Pandemic

The Pound (GBP) has continued to fall on dire economic predictions, with the International Airlines Group (IA), with its headquarters in London, suffering from a slide in shares by almost -6%.

Michael Hewson, an analyst at CMC Markets, commented:

‘One thing seems certain, while last night’s actions by IAG have attracted some significant criticism in terms of their timing, they also point to the challenges facing the travel sector in the weeks and months ahead.’

Furthermore, the UK Barclays bank has set side £2.1 billion to cover losses it expects to receive from the coronavirus pandemic. The bank cited concerns over businesses and consumers not being able to repay their loans.

Barclays CEO Jes Staley placed the blame squarely on Covid-19:

‘The impact of COVID-19 came late in what was until that point a good quarter. Statutory profit before tax was £0.9bn and profit before tax excluding credit impairment charges was £3.0bn. We have taken a £2.1bn credit impairment charge which reflects our initial estimates of the impact of the COVID-19 pandemic.’

As a result, the Pound (GBP) fell against the ‘Loonie’ today on rising fears over the UK’s economy going forward.

GBP/CAD: Outlook: Could the Pound Rise on Hints of Easing UK Lockdown Measures?

Canadian Dollar (CAD) investors will be looking ahead to tomorrow’s release of February’s Canadian GDP report. If this significantly falls below consensus before the coronavirus took hold of the economy, then we could see the ‘Loonie’ sink.

The GBP/CAD exchange rate will remain sensitive to the UK’s economic situation this week. However, if the Government announces – or hints at – the possibility of easing lockdown restrictions, then we could see Sterling rise.

David Moore

Contact David Moore