Pound to Canadian Dollar Exchange Rate Edges Higher despite Poor UK Outlook
While the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has been trending lower this week, it has been able to avoid the week’s worst levels. Investors are hesitant to buy the Pound (GBP) amid poor UK data, but the Canadian Dollar (CAD) is suffering from oil price news.
Since opening this week at the interbank level of 1.71, GBP/CAD has been trending with a downside bias. However, after a dip back to last week’s levels of 1.69, GBP/CAD rebounded slightly.
Before markets closed for the week, GBP/CAD was trending in the interbank region of 1.70. It has been able to hold ground more easily due to weakness in the Canadian Dollar.
Slews of Canadian data due next week could influence Canada’s coronavirus outlook. This could help the Canadian Dollar to avoid more losses in relation to coronavirus fears.
Pound (GBP) Exchange Rates Struggle to Advance as UK Data Dampens Outlook
Even against a weakening Canadian Dollar (CAD), the Pound (GBP) fell over the past week.
Sterling’s outlook was already gloomy due to market uncertainty over the UK government’s handling of the coronavirus and Brexit crises. However, this week’s data only further damaged Britain’s outlook.
Earlier in the week, Britain’s May growth rate data showed that economic activity was worse than expected amid the coronavirus pandemic.
UK inflation and job market stats have done little to boost UK sentiment either. Amid concerning economic and political outlooks, investors have simply had little reason to buy the Pound, even in rises in market risk-sentiment.
Canadian Dollar (CAD) Exchange Rates Hit by News of Tapered Oil Production Cuts
The Canadian Dollar (CAD) is a currency that is often correlated to market sentiment. Things like risk and trade sentiment, as well as US economic sentiment, all often have an impact on the Canadian Dollar’s appeal.
For much of this week, higher market risk-sentiment drove the Canadian Dollar higher.
The Canadian Dollar also found some support in the latest Bank of Canada (BoC) policy decision, in which the bank indicated that it would not need to ramp up its stimulus scheme. This bolstered hopes for how Canada was weathering the coronavirus pandemic.
However, towards the end of the week the Canadian Dollar was hit by a fresh plunge in oil prices. As oil is Canada’s biggest export, the Canadian Dollar was impacted by news that oil producers were pulling back on production cuts.
It led to fresh fears that oil could see oversupply issues amid the coronavirus pandemic.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Key Canadian Data
The Pound (GBP) outlook remains dominated by uncertainties. These are likely to limit the Pound to Canadian Dollar (GBP/CAD) exchange rate’s potential for gains going forward.
In fact, the Pound is unlikely to advance much unless the Canadian Dollar (CAD) becomes much weaker.
This is why, unless there are surprising Brexit developments in the coming week, GBP/CAD may be driven more by upcoming Canadian data.
Next week will see the publication of some major Canadian ecostats. Retail sales are due on Tuesday, while inflation will follow on Wednesday.
If these stats come in above expectations, hopes for Canada’s coronavirus outlook could improve. This would make it more likely for GBP/CAD to fall. The pair would be more likely to advance if the data disappoints.
Pound to Canadian Dollar (GBP/CAD) exchange rate investors will also await potential Brexit developments and the global coronavirus outlook will of course remain influential.