Pound Canadian Dollar (GBP/CAD) Exchange Rate Recovers as Trudeau Wins Election
The Pound Canadian Dollar (GBP/CAD) exchange rate rebounded back to CA$1.75 this afternoon before slipping to CA$1.74 towards the end of the European session.
GBP/CAD strengthened after the UK government intervened in the UK’s gas crisis and Justin Trudeau won the Canadian election to stay as Prime Minister, but fell short of a majority.
Pound Makes Modest Gains as UK Government Takes Action in Gas Crisis
The Pound ticked higher against the Canadian Dollar this afternoon after the UK government made a deal to restart CO2 production.
While the mounting gas crisis has caused gas prices to hit record highs, resulting shortages of CO2 threaten to impact medical supplies and procedures, and food and drink production in the UK, causing food shortages.
UK Prime Minster Boris Johnson said:
“Obviously, we’re working with the companies to make sure that we can keep the supplies going.
“On the carbon dioxide issue that’s particularly important for some industries, we’re taking direct steps to make sure that that continues to be available.”
Meanwhile, the Pound also found some support from Boris Johnson’s comments on the energy crisis, commenting:
“I think people should understand the short-term nature of this, the causes of it. It’s caused by the global economy coming back to life and we’re going to address the various supply chain problems and spikes in every way that we can. We are talking to the energy companies and doing what we can to keep prices low.”
The UK Prime Minister’s comments may ease some fears that the gas crisis could impact the wider UK economic outlook going into winter.
Earlier during the European session the Pound received a boost from the latest better-than-expected CBI industrial orders trends figures. Data showed export orders are at the highest levels since March 2019 and total manufacturing orders are at a record high.
Canadian Dollar Holds as Trudeau Wins Election
CAD exchange rates held onto some of yesterday’s gains as Canadian Prime Minster Justin Trudeau stayed in power following elections.
However, Trudeau failed to secure a majority, with the Canadian parliament looking likely to remain similar to previous; in turn failing to provide significant support to CAD exchange rates.
Instead, the oil-sensitive Canadian Dollar moved in line with WTI crude prices, dipping below $70 a barrel before recovering to start-of-the-day levels.
GBP/CAD Forecast: Bank of England to Drive Pound Movement
The upcoming Bank of England (BoE) interest rate decision on Thursday will likely be the key driver of the Pound Canadian Dollar exchange rate this week.
As the UK faces a winter energy crisis, rising inflation and calls from some on the BoE Monetary Policy Committee to reduce its bon-buying programme, any hints of the central bank tightening monetary policy could drive significant Sterling movement. However, the BoE is expected to keep interest rates and quantitative easing unchanged this month as UK growth concerns mount.
GBP exchanges rate could also receive support from September’s manufacturing and services PMIs. Forecasts indicate the UK private sector continued to grow this month, although manufacturing could experience a slight slowdown.
Meanwhile, the Canadian Dollar could come under pressure as July’s retail sales figures are expected to show a -1.7% contraction in July as the Canada experienced a rise in coronavirus cases.