GBP/CAD Exchange Rate Rises as Oil Prices Remain ‘Pretty Much Flat’
The Pound to Canadian Dollar (GBP/CAD) exchange rate edged higher by 0.2% today as concerns over oil markets weigh on the oil-sensitive ‘Loonie’. The pairing is currently trading around CA$1.69.
The Canadian Dollar (CAD) failed to rise against Sterling today as the Western Texas Intermediate oil price appear to be stuck within the mid-$30 per barrel range. Markets are awaiting confirmation on industry data which showed an unexpected increase in US crude stocks.
Harry Tchilinguirian, the head of commodity research at BNP Paribas, commented:
‘All in all oil is pretty much flat after the price correction yesterday. The market opened lower after the shock API numbers, but it is now treading water until EIA statistics are released.’
Meanwhile, the risk-sensitive Canadian Dollar (CAD) continues to benefit from positive risk sentiment, with the global economy showing steady signs of recovery following the peak of the coronavirus pandemic.
However, today’s release of the Canadian current account data for the first quarter has weighed on the ‘Loonie’. The data showed a worse-than-expected fall from -9.31 billion to -17.32 billion.
Pound (GBP) Edges Highers as No 10 Defends Dominic Cummings
The Pound (GBP) edged higher after Downing Street backs Prime Minister Boris Johnson’s aide, Dominic Cummings, who broke lockdown restrictions in April. As a result, Sterling has edged higher as political uncertainty within the Tory Party eases.
A spokesman for Downing Street said:
‘The police have made clear they are taking no action against Mr Cummings over his self-isolation and that going to Durham did not breach the regulations. The prime minister has said he believes Mr Cummings behaved reasonably and legally given all the circumstances and he regards this issue as closed.’
Governor of the Bank of England (BoE) Andrew Bailey also warned that the UK’s economic recovery could be longer and tougher than expected.
Mr Bailey said:
‘The risks are undoubtedly on the downside for a longer and harder recovery.’
‘It is also possible that the pace at which activity recovers will be limited by continued caution among households and businesses even as official social distancing measures are relaxed.’
Meanwhile, with few economic data releases of note this week, Sterling has remained sensitive to the UK’s coronavirus developments. With hopes rising over Britain’s economic recovery next month, the GBP/CAD exchange rate has risen.
GBP/CAD Outlook: Could Brexit Fears Drag Down Sterling?
Canadian Dollar (CAD) investors will be awaiting tomorrow’s publication of Canada’s annualised GDP report for the first quarter. However, if this confirms forecasts and falls from 0.3% to -10%, then we could see the ‘Loonie’ suffer.
Meanwhile, oil prices will continue to direct the CAD/GBP exchange rate this week. Any signs of sinking oil prices would weigh on the oil-sensitive Canadian Dollar.
The GBP/CAD exchange rate could continue to head higher if the UK’s coronavirus situation improves. However, with Brexit in focus, we could see Sterling’s gains clipped by uncertainty.