Pound to Canadian Dollar Exchange Rate Rebounds on Oil Price Concerns
Update 16:20 BST 16/07/2020:
After trending lower for much of Thursday’s session, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate rebounded this afternoon.
GBP/CAD has recovered around half of last week’s gains and is trending in the region of 1.70 again at the time of writing.
While Bank of Canada (BoC) news boosted CAD yesterday, the currency has been unable to hold its gains.
As the Canadian Dollar (CAD) is a currency correlated to market trade sentiment and oil prices, it fell today after the latest oil market news.
Oil prices fell after OPEC+ oil producers announced that oil supply cuts could be curbed. It caused concerns of fresh oil price weakness amid the coronavirus pandemic to return.
(Originally published 11:21 BST 16/07/2020)
Pound to Canadian Dollar Exchange Rate Sees Wednesday Plunge on BoC News
After holding its ground for the first half of the week, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate plummeted yesterday. It comes as the Bank of Canada (BoC) surprised markets by avoiding an expansion of its quantitative easing (QE) scheme.
GBP/CAD opened this week at the interbank level of 1.71, just below last week’s month and a half high of 1.72.
After largely avoiding losses for the first half of the week though, GBP/CAD dropped sharply yesterday afternoon. The pair lost over a cent and continued to slide lower today.
At the time of writing on Thursday, GBP/CAD is trending closer to the interbank region of 1.69 again. The pair has now shed almost all of last week’s gains.
The Pound (GBP) outlook is being weighed by a gloomy UK outlook. However, concerns about the US coronavirus outlook could limit the Canadian Dollar’s (CAD) appeal going forward as well.
Pound (GBP) Exchange Rates Struggle for Ground after Week of Unpromising Data
While the Pound (GBP) attempted to advance earlier in July, the currency’s outlook has taken another hit this week.
Earlier in the week, poor UK growth results were published. The data indicated to investors that Britain’s growth was being hit harder by the coronavirus pandemic than previously feared. Analysts predicted that Britain’s economy would fail to see a v-shaped recovery as a result.
The other UK data that’s been published since has done little to offset those concerns. Today’s UK job market report showed more mixed stats. Analysts are anxious that the key unemployment rate has still yet to reflect the large number of lost jobs during the pandemic.
Concerns about Britain’s economy amid the pandemic are only part of Sterling’s poor appeal. Brexit concerns also hang over the outlook.
According to Rony Nehme, Chief Market Analyst at Squared Financial:
‘We still believe going forward the UK faces issues and think the economy will fare worse than others in Europe,’
Canadian Dollar (CAD) Exchange Rates Rebound on Bank of Canada (BoC) News
The Canadian Dollar (CAD) had been seeing relatively poor performance in the first half of this week. As the number of coronavirus infections in the US continued to worsen, US economic concerns continued to bleed over into Canada.
However, the Canadian Dollar received a mid-week boost yesterday. Following the Bank of Canada’s (BoC) July policy decision, investors piled into CAD and the currency shot higher against rivals like the Pound (GBP).
It came as the bank decided against expanding its quantitative easing (QE) scheme. While this move may typically have concerned markets, it instead reflected the bank’s confidence that Canada’s economy would be able to rebound from the pandemic.
The CAD rebound came despite BoC Governor Tiff Macklem saying that Canada’s monetary policy would remain loose for a long time to come.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Investors Await Next Week’s Canada Data
A combination of poor UK data and hopes for Canada’s economy are keeping the Pound to Canadian Dollar (GBP/CAD) exchange rate under pressure this week.
Unless the outlook shifts notably, this movement could continue.
Tomorrow will see the publication of UK consumer confidence data, with Canadian wholesale sales following in the afternoon. Strong Canadian data would make it easier for GBP/CAD to be kept near its lows.
Looking ahead to next week though, major upcoming Canadian data could influence the Canadian Dollar’s outlook if it surprises.
Canadian retail sales data is due Tuesday. It will be followed on Wednesday by inflation stats.
If the retail sales stats come in much worse than expected they could dampen the Canadian Dollar’s appeal. Signs of a worsening coronavirus situation would also weigh heavily on CAD due to its correlation with market risk-sentiment.
As for the Pound, Britain’s gloomy coronavirus and Brexit outlooks continue to weigh on its outlook. Positive developments in these areas could make it easier for the Pound to Canadian Dollar (GBP/CAD) exchange rate to rebound.