UPDATE: The Pound Canadian Dollar continued to rise this afternoon s oil prices dropped on an expected supply increase. At the time of writing, the pairing is currently fluctuating around CA$1.73.
As a result, the commodity-linked ‘Loonie’ has fallen against many of the major currencies, with concerns that this could severely impede Canada’s economic recovery in the months ahead.
Pound investors have remained optimistic, with the looming lifting on lockdown measures on July 19 buoying confidence in the nation’s economic recovery this year.
The Bank of England (BoE) also warned that it could step in to curb rising inflation. Hawkish comments about the nation’s economic recovery were also GBP-positive.
GBP/CAD Exchange Rate Rangebound as UK Economy Recovers
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady this morning after Chancellor Rishi Sunak said that the UK’s economy is ‘bouncing back’ because of soaring payrolls last month. The pairing is currently fluctuating around CA$1.73.
Sterling failed to rise against the ‘Loonie’ with some GBP investors remaining cautious ahead of the lifting of lockdown measures next week, on July 19.
Chancellor Sunak was more optimistic, however, saying:
‘As we approach the final stages of reopening the economy, I look forward to seeing more people back at work and the economy continuing to rebound.
‘We are bouncing back – the number of employees on payrolls is at its highest level since last April and the number of people on furlough halved in the three months to May.’
Today saw the release of the latest UK unemployment rate data for May, which continued to fall thanks to the easing of lockdown measures.
Areas such as the North East, North West, East Midlands and Northern Ireland have seen an improvement in employment since last year.
As a result, confidence in the UK continues to grow, with hopes that the lifting of lockdown restrictions next week will further boost business hiring.
Canadian Dollar (CAD) Exchange Rate Dips on Falling Oil Prices
The Canadian Dollar slipped slightly today as falling oil prices have weighed on demand for the commodity-linked ‘Loonie’.
Following reports that the United Arab Emirates and Saudi Arbia could be close to resolving tensions over oil output has meant that OPEC+ has increased production. This sent oil prices falling, limiting the appeal for the oil-sensitive Canadian Dollar.
Avtar Sandu, senior commodity trader at Phillips Futures in Singapore, explains:
‘The market is not taking any chances. Prices are very overbought anyway, so traders might want to take some money off the table before the deal is concrete.’
Fluctuating oil markets have dampened confidence in the Canadian economy this week, with concerns that dropping oil prices could hinder the nation’s economic recovery in the months ahead.
Coming up later today, the Canadian ADP employment change data for June could influence the CAD/GBP exchange rate.
Could improvement levels of employment in Canada drive up the Canadian Dollar?
Pound Canadian Dollar Forecast: Canadian Housing Starts Data in Focus
Canadian Dollar (CAD) traders will eye tomorrow’s release of June’s Canadian housing starts report. An improvement in home sales could drive-up the CAD/GBP exchange rate as the outlook for the enation’s economy improves.
Oil prices will be the main driver for the ‘Loonie’ this week. If oil prices begin to recover, then the Canadian Dollar Pound exchange rate could shed some of its gains.
The GBP/CAD exchange rate could continue to head higher before the weekend, however, if confidence in the UK economy grows ahead of the lifting of lockdown restrictions next week.