The Pound to Canadian Dollar (GBP/CAD) exchange rate was met by volatility last week, in response to growing concerns over a second wave of coronavirus infections.
What’s Been Happening: Risk of a Coronavirus Resurgence Rocks Markets
The Pound got off to a strong start against the Canadian Dollar last week, with the announcement the UK would be reopening more of its economy from 4 July cheering GBP investors.
However, these gains were quickly capped, following the publication of an open letter from UK health experts, warning the UK must do more to prepare for a second wave of coronavirus infections.
Sterling then shed a good portion of its gains through the latter half of the session, as Brexit jitters returned in the wake of comments from German Chancellor Angela Merkel warning the UK will need to ‘live with the consequences’ of Brexit.
The Canadian Dollar, meanwhile, faced some headwinds last week as concerns over a coronavirus resurgence dented oil prices, amidst fears fresh restrictions on movement could hit global demand.
Three Things to Watch Out for This Week
1. Brexit Headlines
In the spotlight this week will be the start of ‘intensified’ Brexit trade talks between the UK and EU. Will a lack of progress in negotiations leave Sterling on the defensive throughout the session?
2. UK Coronavirus Developments
Also in focus for GBP investors will be any headlines pertaining to the UK’s coronavirus outbreak, with Sterling sentiment set to sink if more local lockdowns need to be imposed as a result of surging cases.
3. Oil Prices
In the absence of any notable economy data, its likely we will see the price of oil continue to act as the main catalyst behind the Canadian Dollar this week, with the ‘Loonie’ potentially facing pressure if concerns over demand send crude prices lower.
The GBP/CAD exchange rate is likely to continue to trade in a wide range this week as the combination of Brexit and coronavirus uncertainty looks set to infuse the pairing with fresh volatility.