Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rangebound as Rising Oil Prices Steady ‘Loonie’

GBP/CAD Exchange Rate Steady as Oil Market Normalises

The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently fluctuating around CA$1.7126.

The Canadian Dollar (CAD) has continued to benefit from an oil price rally this week, after the WTI hitting US$40.38 following a 2% jump on Tuesday.

Norbert Rücker, Head of Economics & Next Generation Research at Julius Baer, was optimistic about oil prices remaining high, saying:

‘Demand still tops supplies as the world economy recovers. We see the oil market normalising over the coming months and stick to our bullish view.’

With oil being Canada’s major commodity, this has boosted hopes for the nation’s economic recovery in the months ahead.

In Canadian economic news, today saw the release of September’s ADP Employment Change report, which fell by -240.8 thousand.

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, commented on the report:

‘[T]he labour market continued to post a decline in employment. The biggest job losses were in the trade, transportation and utilities; education and healthcare; and manufacturing sectors.’

Pound (GBP) Steady as UK Markets Brace for Brexit News as EU Summit Unfolds

The Pound (GBP) failed to rise against the Canadian Dollar (CAD) as Brexit talks are still ongoing with the EU Summit.

However, GBP investors have remained cautious after Prime Minister Boris Johnson said he was ‘disappointed’ about the lack of progress in talks going before.

A spokesperson for Downing Street said:

‘The prime minister said that he looked forward to hearing the outcome of the European Council and would reflect before setting out the UK’s next steps.’

In British economic news, today saw the British health and beauty retailer report losses of nearly 30% in its sales last quarter.

As a result, this has sparked concerns for UK’s struggling retail sector as parts of England re-enter Covid-19 lockdowns.

Boots said in a statement:

‘Boots UK comparable retail sales decreased 29.2 percent on a constant currency basis as footfall in stores continued to be significantly reduced due to COVID-19, particularly in major high street, train station and airport locations. Footfall did, however, improve steadily in the fourth quarter compared with the third quarter.’

GBP/CAD Outlook: Could Positive Brexit Developments Boost the Pound?

Canadian Dollar (CAD) investors will be looking to tomorrow’s release of August’s Canadian Manufacturing Sales figure.

If this confirms forecasts and falls by -1.4%, then we could see ‘Loonie’ shed some of today’s gains.

Meanwhile, the Canadian Dollar (CAD) will remain sensitive to global risk sentiment and oil prices.

Any further US political uncertainties – or rising Covid-19 cases throughout Europe – would prove CAD-negative.

Pound (GBP) traders will be keeping a close eye on the UK’s Covid-19 infection rate. If this continues to rise, then Sterling would suffer.

The GBP/CAD exchange rate will also be influenced by Brexit developments.

If it looks increasingly likely that Downing Street could secure a post-Brexit trade deal with the EU, then we would see the Pound rise.

David Moore

Contact David Moore