Pound to Canadian Dollar Exchange Rate Struggling to Hold Last Week’s Gains
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was one of the few Pound (GBP) pairs to rise last week. However, while global coronavirus fears have only worsened since last week, the pair has been losing its ground.
After opening last week at the interbank level of 1.68, GBP/CAD spent most of the week climbing. In the middle of the week, GBP/CAD just barely reached the key level of 1.70.
Towards the end of the week though, GBP/CAD began to tumble again. GBP/CAD ultimately closed the week just below the level of 1.69 in the interbank region of 1.68.
This week’s movement has seen GBP/CAD continue to tumble within that region. This is despite a lack of strong Canadian Dollar (CAD) support. Prices of oil, Canada’s biggest export, continue to tumble on coronavirus fears.
Pound (GBP) Exchange Rates Lack Appeal despite Hopes for Government Action
Fresh speculation that the UK government could be preparing a new infrastructure boost to help support the economy have done little to support the Pound (GBP) today.
According to Analysts at ING though, this is unlikely to boost the Pound much due to market focus on Brexit uncertainty. They said:
‘However, not many politicians are talking austerity right now and instead we see GBP dominated by EU departure talks, the next round of which takes place tomorrow.’
Concerns over how Britain’s economy will weather both a coronavirus ‘second wave’ and a potential no-deal Brexit are keeping Sterling unappealing.
EU negotiators continue to say the UK government lacks a plan for how it wants to proceed with UK-EU relations post-Brexit.
Canadian Dollar (CAD) Exchange Rate Up despite Damp Market Risk-Sentiment
Fears over a ‘second wave’ of global coronavirus infections have continued to worsen over the past week. As a result, global market risk and trade-sentiment has taken a considerable hit.
The Canadian Dollar (CAD) is a currency often correlated to market risk-sentiment. However, it is correlated especially strongly with trade, particularly oil sentiment.
Prices of oil, plunged last week, as ‘second wave’ fears rose across the globe. This was a large part of last week’s Canadian Dollar losses.
In fact, the Canadian Dollar remains fairly unappealing this week. While it continues to recover against the even weaker Pound, Analysts at ING note investors are still short on CAD:
‘Friday’s CFTC data showed that speculative community remained short the Canadian dollar.’
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Could React to Growth Results
The Pound to Canadian Dollar (GBP/CAD) exchange rate may not have much reason to climb again following losses in recent sessions.
The Pound (GBP) simply lacks in appeal. However, if global oil prices significantly worsen the Canadian Dollar (CAD) may struggle to advance too, which could limit GBP/CAD movement.
Pound and Canadian Dollar investors may also closely watch tomorrow’s UK and Canadian data.
Key UK and Canadian Gross Domestic Product (GDP) stats will be published tomorrow. Britain’s final Q1 growth data will come in in the morning, followed later by Canada’s April growth results.
If the data beats expectations, it could boost hopes for economic resilience amid the coronavirus pandemic. Strong Canadian data may give investors more reason to buy CAD.
However, overall the Pound to Canadian Dollar (GBP/CAD) exchange rate will continue to focus on coronavirus and Brexit developments.