Pound to Canadian Dollar Exchange Rate Rebounds from Half-Month-Low
Despite the Pound’s (GBP) attempts to advance against other major currencies, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has been trending lower for most of this week.
Since opening this week at the interbank level of 1.74, GBP/CAD has continued the downside trend that has lasted for most of August so far. Yesterday, GBP/CAD touched on a low of 1.72, which was the lowest level for the pair in half a month.
While GBP/CAD is recovering today, it has only just edged into the region of 1.73. GBP/CAD is still trending over a cent and a half below the week’s opening levels.
This is despite weaker oil prices for most of the week. Weaker oil prices persist though and are starting to weigh more on the oil-correlated Canadian Dollar (CAD).
Pound (GBP) Exchange Rate Rebound Limited amid UK Quarantine Jitters
Investors remain hesitant to buy the Pound due to concerns over Britain’s economic outlook.
The coronavirus pandemic continues to weigh heavily on the UK economy, with UK data coming in mixed. Concerns that the Brexit process could end with a no-deal outcome also still weigh on the Pound.
Today, the Pound is attempting to rebound from lows against some rivals. However the British currency is being weighed by fresh concerns about new UK quarantine rules for travellers.
According to Alastair George, Head Strategist at Edison Investment Research, these factors are weighing on market appetite for taking risks:
‘What we have got is a significant amount of uncertainty over the evolution of coronavirus pandemic, which is maintaining a risk premium for the transportation, leisure and hospitality sectors.’
Canadian Dollar (CAD) Exchange Rates Fall as Oil Prices Take Toll
Prices of oil, Canada’s biggest export, have been weakening once again over the past week or so.
Oil prices have been hit by worsening concerns about a ‘second wave’ of global coronavirus infections. This is due to concerns that demand for the commodity will remain weak if economies remain locked down and stay in quarantines.
Oil prices worsened further today as the IEA lowered its oil demand forecasts for 2020 and 2021. According to the IEA report:
‘For road transport fuels, demand in the first half of 2020 was slightly stronger than anticipated, but for the second half we remain cautious and the upsurge in Covid-19 cases has seen us downgrade our estimates, mainly for gasoline.’
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Coronavirus and Retail News
This week’s news has seen the Pound to Canadian Dollar (GBP/CAD) exchange rate attempting to rebound from its lowest levels in half a month.
However, the Pound (GBP) outlook remains too weak for the British currency to mount a more solid recovery.
Pound investors are likely to become more focused on the Brexit process in the coming weeks, as August comes into its second half. If there are any surprising Brexit developments the Pound could see a jump in demand.
Meanwhile, the Canadian Dollar (CAD) could remain weak on oil price weakness going forward.
The Canadian Dollar could find more solid support if next week’s Canadian retail sales stats impress investors.
UK retail sales, also due late next week, could also influence the Pound to Canadian Dollar (GBP/CAD) exchange rate.