Pound Canadian Dollar (GBP/CAD) Exchange Rate Climbs after Oil Price Fall

(Updated 16:35 07/04/22)

The Pound Canadian Dollar (GBP/CAD) exchange rate steadily gained today. Oil prices made some recovery from their prior lows but kept pressure upon the commodity-tied ‘Loonie’ (CAD). The Pound (GBP) meanwhile has benefitted from a day free of significant military engagements in the Ukraine-Russia conflict.

At time of writing the GBP/CAD exchange rate is at around $1.6462, up roughly 0.3% from this morning’s opening figures.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Subdued amid Fragile Risk Sentiment

The Pound Canadian Dollar (GBP/CAD) exchange rate is muted today. The Canadian Dollar (CAD) is recovering following a drop in oil prices on Wednesday. A volatile risk appetite meanwhile is likely limiting gains for the Pound (GBP).

At time of writing the GBP/CAD exchange rate is at around $1.6422, virtually unchanged from this morning’s figures.

Canadian Dollar (CAD) Gains as Oil Prices Recover

The Canadian Dollar (CAD) is gradually recovering from its prior lows today. The commodity-tied ‘Loonie’ fell overnight after the price of crude oil fell to a three-week low. The price of the commodity fell on Wednesday to around $97 per barrel.

The drop in oil prices came after the International Energy Agency (IEA) agreed on Wednesday to release 60 million barrels of crude into the markets. The move came amid attempts to bring down high prices in the markets. The release of 180 million barrels by the US the week prior also contributed to the commodities fall.

Oil prices have ticked higher today amid continued worries over tight supplies.

A Shanghai based oil trader said:

‘The oil release from the IEA members reflects strong political determination against Russia oil over its invasion of Ukraine, but it’s not enough to fill the actual supply shortage.’

Pound (GBP) Muted as UK Announces Fresh Russia Sanctions

The Pound (GBP) is making limited gains against many its rivals today. The announcement of a fresh wave of sanctions against Russia may be helping to bolster Sterling today. Fears from within the UK’s housing market that the Bank of England (BoE) could raise interest rates may also be prompting hawkish bets on the currency.

The UK’s foreign secretary Liz Truss announced a fresh wave of sanctions against Russia on Wednesday. The measures include an asset freeze on Russia’s largest bank, sanctions on eight more oligarchs, and a commitment to end Russian oil and coal imports by 2023. Truss stated the additional sanctions were in response to the reported massacre of civilians in the town of Bucha by Russian forces.

Further developments in the Ukraine-Russia conflict are likely limiting gains for GBP however. Russian forces claimed today that they have destroyed four fuel storage facilities in Ukraine. Ukrainian presidential adviser Oleksiy Arestovych reported that Russian forces were also attempting to encircle Ukrainian forces in the east of the country.

Fears from within the UK’s property market of further interest rate hikes may also be propping up the Pound today. UK house prices hit a record-high in March amid a shortage of available properties. Experts are expecting prices to drop in the coming years amid the UK’s cost of living crisis and further rate hikes from the BoE.

Charlotte Nixon, mortgage expert at Quilter, said:

‘The Bank of England is expected to increase interest rates further, which will further reduce people’s spending power. Prior to the outbreak of war in Ukraine, inflation was expected to peak at 7.25%, this is now likely to be considerably higher and the only way to combat it is with increased rates.’

GBP/CAD Exchange Rate Forecast: Will Canadian Labour Market Tighten?

With no further significant data for the Pound this week, the currency’s movements are likely to be dictated by global risk appetite. The prospect of a fresh Russian offensive in Ukraine’s Donbas region could limit risk-on trading.

For the Canadian Dollar (CAD), employment figures on Friday could boost expectations of an interest rate hike from Bank of Canada (BoC). Employment change figures for March are forecast to contract . The unemployment rate expected to remain largely unchanged.

Gareth Monk

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