Pound Canadian Dollar (GBP/CAD) Slips amid Bleak Economic Outlook

Pound Canadian Dollar Exchange Rate Slumps as Economic Concerns Darken

The Pound Canadian Dollar (GBP/CAD) exchange rate is slipping today as worsening economic woes weigh heavily on the Pound (GBP) as oil prices climb.

At time of writing the GBP/CAD exchange rate is around $1.5841, shedding most overnight gains and continuing to trade near five-year lows.

Pound (GBP) Remains Vulnerable in the Face of Unrelenting Headwinds

The Pound remains down against the Canadian Dollar (CAD) today as the economic crisis gripping the UK continues to sap GBP demand.

The UK’s latest CPI, due out on Wednesday, may be worrying investors today. With UK inflation forecast to have risen over 9% in April, the first time in over 40 years, the cost-of-living crisis could be set to worsen over the next several months, piling further pressure on the Pound.

Meanwhile, Brexit woes are also hurting GBP. Ireland’s foreign minister, Simon Coveney, has cautioned Boris Johnson over his comments of a unilateral change to the Northern Ireland protocol, saying such a move would cause more problems than it would solve. Scrapping the protocol could trigger a trade war with EU, which would only exacerbate the already bleak economic situation gripping the country. As a result, these concerns are further hampering sterling.

Canadian Dollar (CAD) Trends Higher with Climbing Crude Prices

The Canadian Dollar is enjoying moderate tailwinds as oil prices remain strong.

Having enjoyed a three-day winning streak, crude oil edged lower after concerns of a faltering global demand started to surface thanks to weak economic data out of China, potentially capping any gains over Sterling.

However, it has since reclaimed some losses and remains on an upward trajectory. With the Ukraine crisis not showing any sign of letting up, and the European Union’s inevitable ban on Russian oil imports, this could leave the door open for a renewed tailwind for crude, and the Canadian Dollar.

Pound Canadian Dollar Forecast: Retreating Oil Prices Enough to Boost Sterling?

With no major data out today for either the Pound or Canadian Dollar, market sentiment and domestic politics will be the main catalyst for movement for the GBP/CAD pairing.

As Boris Johnson travels to Belfast, any news about the Northern Ireland protocol could impact Sterling.

For the rest of the week, a flurry of data could see further movement as all eyes will be on the inflation rates on Wednesday for both the UK and Canada. With UK inflation set to jump from 7% to 9.1%, the Pound could suffer. Unemployment figures and retail sales could further influence the GBP/CAD pairing, but with neither set of data expected to be positive, further slumps can be expected.

Danny Tingle

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