(Updated 16:40, 7/7/21) The Pound Canadian Dollar (GBP/CAD) exchange rate has climbed today, after another slump in oil prices dragged on the commodity-linked ‘Loonie’, with WTI crude dropping by over $3.
The volatility in oil comes amid a dispute within the OPEC+ on how and when to increase global oil production. The United Arab Emirates (UAE) has rejected a proposal to further ease output curbs in protest of what it sees as unfair treatment, with the country’s oil production having taken a disproportionate blow from the cartel’s decision to cut output.
With tensions mounting, there are concerns that the UAE may leave OPEC and independently increase oil production, effectively forcing other countries to do the same.
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Pound Canadian Dollar Exchange Rate Open to Further Losses
The Pound Canadian Dollar (GBP/CAD) exchange rate has dipped this morning, as CAD recovers from yesterday’s slump in oil prices.
The GBP/CAD pairing is trading at CA$1.71703 at the time of writing, with Sterling vulnerable to losses in the absence of any notable UK data releases today.
Canadian Dollar (CAD) Climbs as Oil Prices Recover
The Canadian Dollar (CAD) has regained some ground this morning as oil prices recover from yesterday’s slump.
Talks among OPEC+ countries about plans to increase oil production ended without an agreement amid escalating tensions between Saudi Arabia and the United Arab Emirates (UAE).
Concerns that the UAE may choose to increase its oil production without a wider OPEC+ plan, forcing other countries to do the same, sent oil prices tumbling. WTI crude dropped by over $3, after hitting a multi-year high of $76.98.
In response the Canadian Dollar tumbled against the Pound by almost 1%, hitting a two-week low of £0.579964.
However, oil prices are recovering today, which is in turn fuelling a rebound in the commodity-linked ‘Loonie’.
Pound (GBP) Quiet amid Lack of Data
Meanwhile, the Pound (GBP) has been relatively muted today in the absence of any market-moving data.
Coronavirus concerns continue to put some pressure on the Pound, with cases rising rapidly as the UK nears the 19 July reopening date.
There are currently just under 29,000 daily cases. Government modelling suggests this could reach 50,000 by 19 July and 100,000 later in the summer – well above the pandemic peak of 81,000 daily cases, which was hit in late December last year.
The health secretary Sajid Javid said that this elevated number of cases wasn’t necessarily a cause for concern as the vaccination programme has built ‘a defence against this virus.’
Yet some health professionals are concerned that increased transmission could lead to more dangerous, potentially vaccine-resistant variants, and these fears have capped the gains made from the UK’s reopening optimism in recent days.
Pound Canadian Dollar Exchange Rate Forecast: CAD Could Gain if Oil Keeps Climbing
With no major UK data releases due out today, the Pound Canadian Dollar exchange rate may be driven by global oil prices.
If oil prices continue to climb throughout the day, this could cause GBP/CAD to slide lower.
Canada’s Ivey PMI this afternoon may also put downward pressure on the Pound Canadian Dollar pair, as it is forecast to reveal a small expansion in the country’s economic activity in June.
In addition, UK domestic news may cause some movement in Sterling. With a recent flare-up of Brexit tensions and rising coronavirus cases, any negative headlines could weigh on the Pound.