The Pound Canadian Dollar exchange rate exchange rate held steady this morning following Prime Minister Boris Johnson’s confirmation that most Covid-19 lockdown rules and restrictions will get scrapped from 19 July. New Health Secretary, Sajid Javid, however, warned that cases of the virus could soar to 100,000 a day in just a matter of weeks.
What’s Been Happening: Oil Prices Buoy Oil-Sensitive ‘Loonie’
The Pound Canadian Dollar (GBP/CAD) exchange rate fell last week as the commodity-correlated ‘Loonie’ benefiting from rising oil prices, with WTI crude hitting around $75 a barrel.
Oil prices are also expected to rise due to increased demand across the globe as concerns over the Covid-19 crisis begin to ebb in large economies like the United States and China.
It was also reported that Canada’s economy had suffered less from the third-wave of Covid-19 hitting the nation thanks to the Canadian Government’s vaccination programme.
Analysts at Bloomberg commented on Canada’s latest GDP data, which contracted by a better-than-expected -0.3% in April:
‘Despite the contraction, the numbers highlight how well the nation’s economy handled successive waves of lockdowns to contain the spread of the virus.’
Sterling failed to make any significant gains against the Canadian Dollar last week as Covid-19 infection rates continued to soar to levels not seen since February.
Health Secretary, Sajid Javid, remained confident about easing lockdown restrictions in July, while the UK manufacturing PMI for June – which dipped slightly to 63.9 – also retained confidence in the outlook for the nation’s economy.
Three Things to Watch Out for This Week
- UK GDP Data
Pound (GBP) investors will monitor Friday’s slew of economic data for May. Could a robust improvement in the UK economy as lockdowns were eased further boost Sterling?
- Canadian PMI Data
Wednesday will see the release of the latest Canadian Ivey PMI data for June. Any improvement in the outlook for Canada’s economy would see the CAD/GBP exchange rate head higher.
- Oil Prices
Rising oil prices could further push-up the Canadian Dollar against the major currencies this week. However, any signs of sliding demand would be CAD-negative.
Pound Canadian Dollar Forecast
The GBP/CAD exchange rate could head higher this week if confidence continues to grow in the UK’s economic recovery. Now that Downing Street has confirmed lockdowns will be eased this month, we could see Sterling rise against the ‘Loonie’.