GBP/CAD Exchange Rate Steady Despite Oil Prices Hitting $74 This Week

The Pound Canadian Dollar exchange rate held steady this morning despite the commodity-correlated ‘Loonie’ benefiting from rising oil prices. WTI crude hit $74 a barrel this week as output increases to supply demand.

What’s Been Happening: GBP Benefits from New Health Secretary’s Plan to Lift Lockdown Measures in July

The Pound fell last week following the resignation of the now former Health Secretary, Matt Hancock, who was replaced by Sajid Javid. Hancock broke social distancing guidelines in May causing a flurry of controversy and heavy criticism of Downing Street.

As a result, Sterling plummeted due to heightened political uncertainty. But the Pound soon regained its losses after the new Health Secretary, Sajid Javid, appeared confident that lockdown restrictions would be lifted on 19 July.

In UK economic data, last week saw the release of the flash UK manufacturing and services PMI data for June. Both remained strong, pointing to a recovery in the nation’s economy.

Duncan Brock, group director at CIPS, commented on the data:

‘The lockdown lid was lifted on depressed sales and marketplaces buzzed with activity and optimism.’

CAD benefited from rising oil prices, with demand for crude surging as key economies like the Eurozone, the United States, and China cautiously reopened.

Last week also saw the release of the Canadian retail sales data for April, however, which fell by a worse-than-expected -5.7%.

As a result, some Canadian Dollar investors have become cautious about the outlook for the nation’s economy. May’s Covid-19 shuttering of businesses held back Canada’s economic recovery.

Three Things to Watch Out for This Week

  • UK Covid-19 Developments

We could see the Pound head higher this week if Downing Street maintains its optimistic view on easing lockdown restrictions next month. If the new Health Secretary Sajid Javid reiterates his plan to irreversibly lift measures on 19 July, then Sterling would rise.

  • UK GDP Data

Wednesday will see the release of the final UK GDP data for the first quarter. Could an upward revision see the GBP/CAD exchange rate head higher?

  • Oil Prices

The commodity-linked ‘Loonie’ could begin to climb against its peers this week if demand for oil continues to see crude prices rise.

Pound Canadian Dollar Forecast

The GBP/CAD exchange rate will head higher this week if the UK Government sticks to its plan to irreversibly lift lockdown restrictions on July 19.