GBP/CAD Trading in Narrow Range as Coronavirus Weighs on Global Market
The Pound Canadian Dollar (GBP/CAD) exchange rate is directionless in the beginning of today’s session as Coronavirus numbers continue to rocket.
At the time of writing, the GBP/CAD exchange rate is trading at approximately $1.7288, with minimal market movement.
Pound (GBP) Rangebound as Plan B Resumes for 3 Weeks
The Pound (GBP) is muted against the Canadian Dollar (CAD) at the beginning of today’s session, following the announcement that the current Plan B restrictions will remain until at least 26th January 2022.
On Wednesday, it was reported that there was 194,747 daily cases and, within four weeks of a positive test, a further 224 deaths.
Boris Johnson, UK Prime Minister, said:
‘In response to the latest data the cabinet agreed this morning that we should stick with Plan B for another three weeks with a further review before the regulations expire on 26 January.
‘I know some might therefore ask whether this means we can now do away with measures altogether, but I’m sorry to report that hospital admissions are rising rapidly, doubling around every nine days, with already more than 15,000 Covid patients in hospital in England alone.’
In spite of these figures, those who are double-vaccinated no longer need to self-isolate nor take pre-departure tests before arriving in England. This is likely to cause case numbers to continue to rise.
However, the UK government’s decision to not implement further restrictions is allowing the economy to maintain its current momentum and is boosting GBP’s appeal.
Elsewhere, the final services PMI reading for December has slipped from 58.5 to 53.6 confirming growth in the vital services sector slowed at the end of 2021, tempering the Pound’s upside potential.
Canadian Dollar (CAD) Directionless as WTI Slips from 6-Week High
Meanwhile, the commodity-linked Canadian Dollar (CAD) is trading flat against the Pound (GBP) as oil prices fall.
This is largely due to the impact coronavirus may have on the global economy, reducing energy demands.
Brent, the global benchmark for crude oil has fallen by 0.8% to $80.17 a barrel which is weighing on the ‘Loonie’s appeal.
Caroline Bain, chief commodities economist at Capital Economics said in a note:
‘Implied product demand – particularly for gasoline – slumped, suggesting that the public were cautious about travel in the wake of surging cases of the Omicron variant.
‘These fears are likely to persist for a few weeks yet.’
In addition, the Canadian Government has reinstated certain restrictions in a bid to slow the spread of Omicron.
These restrictions include returning to online schoolwork, reimplementation of curfews and closing indoor facilities, such as gyms.
This will cause investors to shy away from the Canadian Dollar as these measures will undoubtedly disrupt the country economic recovery.
GBP/CAD Exchange Rate Forecast: Will ‘Balance of Trade’ Data Weigh on CAD?
Looking ahead, the Pound Canadian Dollar (GBP/CAD) exchange rate is likely to remain under pressure as coronavirus continues to sweep across both nations.
Moreover, CAD may be under pressure from November’s balance of trade which is scheduled to print this afternoon, forecast to slip from CA$2.1 billion to CA$2.03 billion.
If predictions are correct, this will show a slowdown in trade from October’s highs, though still greater than September’s CA$1.86 billion.
CAD may also be influenced by the publication of December’s unemployment figures, on Friday, which are expected to report the jobless rate held at 6%.
Meanwhile, Sterling is likely to be vulnerable to coronavirus and Brexit developments, amid a lull in GBP data.