GBP/CAD Exchange Rate Rises as Oil Prices Dip
(Updated: 16:53 10/08/2021) The GBP/CAD exchange rate rose today following reports that 75% of adults have now been fully jabbed against Covid-19. The pairing is currently fluctuating around CA$1.73.
However, UK daily deaths from the virus have hit their highest level since March, leaving some Pound investors concerned about autumn and winter, when cases are expected to rise.
Professor Paul Hunter from the University of East Anglia, comments:
‘We need to be moving towards reporting hospital admissions that are admitted because of Covid, not because they just happen to be positive and they’re being admitted for something else.
‘Otherwise as the infection becomes endemic we are going to be frightening ourselves with very high numbers that actually don’t translate into disease burden.’
Meanwhile, demand for the oil-sensitive ‘Loonie’ has slipped as spreading Covid-19 infections throughout Asia has limited oil investments.
GBP/CAD Exchange Rate Rangebound as UK Retail Sales Fall Below Forecasts in July
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady this morning following the publication of the latest British Retail Consortium (BRC) like-for-like retail sales data for July. Last month saw retail sales fall below forecasts, with the figure shrinking from 6.7% to 4.7%. The pairing is currently fluctuating around CA$1.74.
Sterling failed to benefit from the latest BRC retail sales, which showed some growth but remained below pre-pandemic levels.
Helen Dickinson, chief executive of the BRC, commented on the report:
‘The lifting of restrictions did not bring the anticipated in-store boost, with the wet weather leaving consumers reluctant to visit shopping destinations.’
Susan Barratt, chief executive of the Institute of Grocer Distribution, was also downbeat in her assessment, saying:
‘Shoppers are increasingly concerned about food and grocery price inflation, with 16% of shoppers expecting that prices will get much more expensive in the year ahead, up from just 8% of shoppers in April.’
However, with Britain further relax some Covid-19 travel restrictions this week, GBP investors have become more confident about the outlook for the nation’s economic recovery.
Canadian Dollar Steady as Oil Prices Fall to 3-Week Low
The Canadian Dollar (CAD) failed to gain on the Pound this morning after oil prices fell to a 3-week low following the announcement of China’s Covid-19 curbs.
Edward Moya, senior market analyst at OANDA, explains:
‘Crude prices are declining as a slowdown in Asia disrupts the demand outlook.’
With the Canadian economy heavily reliant on strong oil prices, this has dampened demand for the commodity-linked ‘Loonie’.
China reported 125 new coronavirus cases on Monday, up from 96 on the previous day, while cases of the virus in Malaysia and Thailand have his daily records.
As a result, demand for oil has slipped, with concerns that rising cases of the Delta variant of the coronavirus throughout Asia causing concern for the global economic outlook.
The Bank of America (BoA) said:
‘The biggest challenge for oil markets remains the uncertainty around COVID as the ‘delta variant’ has made for the highest daily case counts since early 2021.’
In the absence of any Canadian economic data today, CAD investors will continue to monitor global risk sentiment.
If concerns over the spread of the Delta variant of the coronavirus grow, then demand for oil could fall along with the CAD/GBP exchange rate.
Pound to ‘Loonie’ Exchange Rate Forecast: UK GDP Data and Oil Prices in Focus This Week
A quiet week in terms of UK economic data, Pound investors will be looking ahead to Thursday’s release of the flash GDP data for the second quarter.
Could an uptick in UK economic growth drive-up the GBP/CAD exchange rate later this week?
Meanwhile, Sterling traders will monitor the UK’s Covid-19 situation. Any signs of falling daily Covid-19 infections would be Pound-positive.
Oil prices will continue to drive the CAD/GBP exchange rate. If oil prices fall, however, then the ‘Loonie’ will further struggle against the Pound.