Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Edges Higher as Canadian Retail Sale Suffer Record Fall
UPDATE: The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate edged around 0.3% higher this afternoon. This left the pairing trading at around CA$1.7099.
The ‘Loonie’ was left under pressure today after Canada’s retail sales plunged by a record -10% in March. In terms of volume, sales slumped by -8.2%.
Statistics Canada showed sales plummeted as the government shuttered many non-essential businesses as the coronavirus pandemic hit.
Around 40% of retailers closed their stores in March, while many were forced to stay open or expand their e-commerce platforms.
They also noted that April’s data could post an even sharper decline which further dampened ‘Loonie’ sentiment.
In a note CIBC Capital Markets’ senior economist Royce Mendes wrote:
‘Data for March show an ugly situation even before the economy was tamped down for a full month.’
Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as British Retail Sales Tumble
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained flat this morning, leaving the pairing trading at around CA$1.7076.
Sterling was left under pressure on Friday as data revealed British retail sales plummeted by the most on record.
Much of the country’s retail sector was hit by the government’s coronavirus lockdown measures, causing sales volumes to fall by -18.1% in April.
Some analysts have noted there may not be a rapid bounce-back for retailers once the lockdown is lifted.
ING economist, James Smith noted:
‘Recent surveying from YouGov showed that just under half of people would be uncomfortable with returning to a clothing shop, although the jury is out on whether the public will become more relaxed by the time retailers do reopen next month.’
Meanwhile, further data revealed the British government borrowed the most on record in April. This pushed public debt close to 100% of economic output.
Borrowing in April rose to £62.1 billion, six times higher compared to the same month last year. Added to this, March’s borrowing was upwardly revised to almost £15 billion due to the government’s furlough scheme.
Samuel Tombs, Pantheon Macroeconomics’ economist noted:
‘We still think that public borrowing will equal about 15% of GDP this year – greatly exceeding the 10% peak in the 2008-to-09 recession even if a second virus wave is avoided.’
Canadian Dollar (CAD) Flat as Oil Prices Slump
The oil-sensitive ‘Loonie’ remained flat against the Pound as oil prices slumped on Friday as US-China tensions increased.
China failed to set a target for economic growth this year. This has caused huge concerns the coronavirus pandemic will dwarf fuel demand.
Oil prices have been on the rise in recent weeks, and are on track for a fourth weekly rise after crude prices fell below zero.
However, oil markets were disappointed with Beijing for not setting an economic growth target as the National People’s Congress (NPC) began its week-long meeting.
Increased tensions between Washington and China as well as the country’s plan to implement security legislation in Hong Kong dampened market sentiment.
President Donald Trump warned against China’s attempt to assert further control over Hong Kong.
British Consumer Confidence Left ‘Battered and Bruised’
The Pound was also left under pressure today after UK consumer confidence slumped back to its joint-lowest level since 2009.
Despite moves from Boris Johnson’s government to begin easing lockdown measures, GfK showed confidence fell back to -34.
Commenting on this, Joe Staton, GfK’s client strategy director said:
‘Consumer confidence remains battered and bruised despite efforts at loosening the COVID-19 restrictions.
‘With unemployment claims rising by the highest rate on record and warnings of a severe recession and possible tax hikes, the damage done by the coronavirus pandemic to the UK economic landscape has been laid bare.’
Pound Canadian Dollar Outlook: Canadian Retail Sales in Focus
The Canadian Dollar (CAD) could suffer losses this afternoon against the Pound (GBP) following the release of retail sales data.
If Canada’s retail sales tumble further than expected, it will dampen ‘Loonie’ sentiment.
Meanwhile, CAD could suffer further losses this afternoon if oil prices continue to slide.
Weaker oil prices and increased US-Sino tensions are likely to cause the Pound Canadian Dollar (GBP/CAD) exchange rate to edge higher.