Brief Oil Boost Fails to Knock Bullish Pound to Canadian Dollar Exchange Rate

Overnight, prices of oil saw a jump. As oil is Canada’s most lucrative export, this briefly bolstered Canadian Dollar demand and limited GBP/CAD gains. However the oil rise was short-lived, and the Pound continues to benefit from market optimism over the possibility of a coronavirus vaccine being developed in Britain.

Last Week: Weakness in Both Currencies Leaves Movement Jittery

GBP/CAD spent most of last week trending with a downside bias. The Pound was sold throughout the week on news that Britain’s economic outlook was gloomier than expected.

However, it was able to recover a little ground against the Canadian Dollar before markets closed for the week.

The Canadian Dollar has also been struggling lately. As Canada’s economy is closely correlated to the US economy as well as oil prices, concerns about the coronavirus pandemic’s impact on the US and oil markets has been weighing on CAD as well.

Three Things to Watch For This Week

  1. Canadian Inflation Rate

Following today’s Canadian retail report, tomorrow’s Canadian inflation data will be the biggest news of the week for the Canadian Dollar.

2. Friday’s UK Data

Key British data including retail sales and PMI projections will be published on Friday. They will give investors a better idea of how Britain’s economy is performing amid the coronavirus pandemic.

3. Coronavirus Developments

Developments regarding the coronavirus pandemic, including infection rates and progress on potential stimulus and vaccines, will continue to drive factors like market risk sentiment and oil prices.

GBP/CAD Outlook

The Pound to Canadian Dollar exchange rate may be in for further gains if oil prices and rising coronavirus infections continue to weigh on CAD. However the Pound’s potential for gains may remain limited as well if Britain’s own situation shows fresh signs of concern.

Josh Jeffery

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