Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as OPEC+ Meeting Buoys Oil Prices
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained muted on Friday. This left the pairing trading at around CA$1.7024.
The Canadian Dollar was left flat today as oil prices rose after OPEC moved up their discussions on whether to extend production cuts to Saturday.
This suggests some countries that have earlier dragged their heels have agreed to align themselves with further cuts.
Brent jumped 16% since Friday, reaching a three-month high, putting prices in a range producers such as Russia are more comfortable with.
On Friday, Russia’s energy ministry said a video conference between OPEC+ would be held on Saturday. The group agreed to bring forward the meeting, which had been scheduled for next week if Iraq and others agreed to continue with existing supply cuts.
According to Petromatrix consultancy’s Oliver Jakob:
‘Prices are up with the meeting scheduled for tomorrow. There was lots of confusion […] so it looks like they found a way forward.’
Currently, both Saudi Arabia and Russia want to extend the current output cuts of 9.7 million barrels per day (bpd). Although, if oil producers do not agree, the cut could fall back to 7.7 bpd.
According to ANZ Research:
‘The growing fear is that not only will a deal to extend the deep cuts not be reached, but [some] producers may even relax their current over-compliance. This would ultimately see output rise in coming weeks.’
Pound (GBP) Flat on UK-EU Post-Brexit Trade Talks
Sterling was left largely flat against the Canadian Dollar on Friday, although the currency was able to jump to a three-month high against the US Dollar (USD).
This left the currency set for its largest weekly gain since the end of March.
The currency has been recently weighed down by Brexit-related risks, the prospect of negative interest rates from the Bank of England (BoE), the growing debt pile and high coronavirus death toll.
Although, GBP was offered a boost after the BoE’s executive director said negative rates would not be introduced in the near term. This eliminated some risk, preventing the Pound sliding against the ‘Loonie’.
According to Societe Generale strategist, Kit Juckes, the majority Friday’s strength came from fears about negative rates calmed. He also added that the other 30% was due to today’s US Dollar weakness.
Post-Brexit negotiations remained in focus as talks between the UK and EU are set to conclude today. Britain now has until the end of the month to request an extension to the current transition period.
Juckes also noted that the risk of London and Brussels reaching a deal remained a risk and added:
‘I think the market thinks there’s still a better than 50% chance we’ll muddle through again.’
Pound Canadian Dollar Outlook: Canadian Unemployment in Focus
Looking ahead, the Canadian Dollar (CAD) could slide against the Pound (GBP) following the release of Canadian unemployment data.
The ‘Loonie’ could slump this afternoon if data shows the country’s unemployment rate rises to a fresh high in May.
However, the pairing could be left flat as traders worry about the outcome of the latest post-Brexit UK-EU trade negotiations.
If talks between London and Brussels remain at a standstill, fears the UK could end the transition period without a deal in place could leave the Pound Canadian Dollar (GBP/CAD) exchange rate flat.