GBP/CAD Exchange Rate Sinks as Number 10 Debates Further Lockdown Measures
The Pound to Canadian Dollar (GBP/CAD) exchange rate fell by -0.5% today, with the pairing currently fluctuating around CA$1.72.
Sterling fell against many of its peers today after UK Prime Minister Boris Johnson said there was ‘no question’ that England required together lockdown rules to curb the spread of Covid-19.
Today will see Boris Johnson outline further steps to tackle the coronavirus, with investors concerned that the UK could follow Scotland into a full national lockdown.
A spokesperson for Number 10 commented:
‘The spread of the new variant of Covid-19 has led to rapidly escalating case numbers across the country.
‘The prime minister is clear that further steps must now be taken to arrest this rise and to protect the NHS and save lives.
‘He will set those out this evening.’
However, GBP investors are becoming more optimistic following the rollout of the Oxford/AstraZeneca vaccine throughout the country.
In UK economic news, today saw the release of the latest UK Manufacturing PMI for December, which beat forecasts and rose by 57.5.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, commented:
‘After a severely turbulent year, UK makers still have a great deal to worry about. Job numbers continue to fall, and material shortages have resulted in the highest cost inflation since 2018. The sector is holding its breath until the terms of the new deal are fully understood and whether new business can be sustained in the same way in a post-Brexit marketplace.’
Canadian Dollar (CAD) Edges Higher on Improving Risk Sentiment
The Canadian Dollar (CAD) edged higher today owning to a generally upbeat tone in global markets.
As a result, the risk-sensitive ‘Loonie’ has benefited from news of further rollouts of Covid-19 vaccines throughout Europe, the US , and the UK.
Furthermore, with the global economy expected to rebound this year, growing risk-sentiment has buoyed the CAD/GBP exchange rate.
Shaun Osborne, the chief currency strategist at Scotiabank, commented:
‘Firm commodity prices, risk appetite and the better than expected run of Canadian data reports ahead of the break have all helped lift the CAD (Canadian dollar).’
Meanwhile, oil – one of Canada’s major exports – has risen in price, with barrels up by 0.4% at $48.69 per barrel.
GBP/CAD Outlook: Could Further UK Lockdown Restrictions Drag Down Sterling?
Canadian Dollar (CAD) investors will be awaiting tomorrow’s release of the latest Industrial Product Price data for November.
Any signs of improvement in Canada’s economy going forward would be CAD-positive.
Oil prices and risk sentiment will also continue to drive the CAD/GBP exchange rate this week.
As a result, we could see the ‘Loonie’ head higher if risk sentiment improves and oil prices head higher.
Pound (GBP) traders will be eyeing Covid-19 developments in the UK.
If the UK enters a national lockdown for the course of January, then we will see the GBP/CAD exchange rate fall.