GBP/CAD Exchange Rate Falls as Oil Markets Improve
The Pound to Canadian Dollar (GBP/CAD) exchange rate dipped today, with the pairing currently trading around CA$1.74.
The Canadian Dollar (CAD) enjoyed an uptick today due to the commodity-linked ‘Loonie’ benefiting from a stabilisation of WTI oil prices, with barrels rising back above $20 per barrel.
Oil makes up a makes up a large chunk of Canada’s overall GDP, so the recent rise in oil demand –partly due to Europe’s easing lockdown restrictions – has boosted the Canadian Dollar today.
Giovanni Staunovo, the commodities analyst at UBS, commented:
‘The outlook for this and next year is turning brighter: demand should be supported by a recovering global economy.’
UBS said the easing of lockdown restrictions would lead to a surge in supply and demand in the oil market. Consequently, ‘Loonie’ investors have become increasing optimistic about Canada’s economy going forward.
In Canadian economic news, today saw the release of March’s International Merchandise Trade which fell to $-1.41 billion.
Statistics Canada commented:
‘In March, despite Canadian borders remaining open for goods, both imports and exports decreased notably, as the impact of measures to contain the spread of COVID-19 in Canada became evident.’
Pound (GBP) Sinks as UK Services PMI and Car Sales Plummet in April
The Pound (GBP) suffered following the release of April’s UK Services PMI today. The figure fell deep into contraction territory at 13.4. As a result, Sterling traders have become jittery as Britain’s largest sector suffers from the coronavirus lockdown.
Tim Moore, the Economics Director at IHS Markit, provided a mixed response, commenting:
‘While output, new work and employment indices all hit all-time lows in April, survey respondents indicated a tentative upturn in their business expectations amid hopes that a gradual re-opening of the economy can be achieved in the summer. However, service providers looking to re-establish business operations overwhelmingly commented that capacity would remain well below previous levels for an extended period and any timings remain highly uncertain.’
Today also saw the news that UK car sales had plunged to their lowest since 1946. New vehicle registrations plummeted by -97% at their lowest level since the end of the Second World War.
Meanwhile, Sterling traders are showing signs of optimism as Downing Street is expected to announce its lockdown easing plans this week.
Nevertheless, uncertainty still remains as the number of Covid-19 deaths in the UK has risen to the highest in Europe.
GBP/CAD Forecast: Could Sterling Rise as UK Begins to Salvage its Economy?
The Canadian Dollar (CAD) will remain sensitive to oil markets this week. As a result, we could see the ‘Loonie’ continue to rise as demand for oil increases.
If US-China trade tensions continue to escalate, then we could see the Canadian Dollar compromised by fears over its export-reliant economy.
Meanwhile, Sterling traders will be looking ahead to tomorrow’s release of the UK Construction PMI for April. However, if this falls deeper into contraction territory, then we could see the Pound suffer.
The GBP/CAD exchange rate could rise in the middle of this week if Downing Street announces its lockdown easing plans. As a result, GBP would rise on hopes that the UK could recover its economy.