Pound Canadian Dollar Exchange Rate Firms amid Pullback in Oil Prices

Pound Canadian Dollar Exchange Rate Extends Recovery

The Pound Canadian Dollar (GBP/CAD) exchange rate is trading with modest gains this morning. Rebounding from a one-week low struck on Tuesday.

At the time of writing the GBP/CAD exchange rate is trading at around CA$1.5957, up roughly 0.2% from this morning’s opening levels.

Canadian Dollar (CAD) Softens as Oil Prices Slip

The Canadian Dollar (CAD) is edging lower this morning as the commodity-linked currency retreats in tandem with oil prices.

The ‘Loonie’ enjoyed strong support through most of yesterday’s session after Brent crude rocketed to a two-month high of $123 a barrel after EU leaders agreed on a partial ban on Russian oil imports.

This pushed the Pound Canadian exchange rate to a one-week low during the European trading session.

However, oil prices subsequently tumbled on reports OPEC would suspend Russia’s participation in a production deal. A move which could pave the way for OPEC members to increase output to make up for any Russian shortfall.

This sent Brent tumbling back to $116 and saw the Canadian Dollar relinquish most of the day’s gains.

Oil prices are beginning to rally again this morning but have so far lent limited support to the ‘Loonie’. CAD investors are likely reluctant to make any aggressive bets ahead of the Bank of Canada’s (BoC) interest rate decision at 14:00 GMT.

Pound (GBP) Muted amid UK Political Jitters

While The Pound (GBP) is showing modest gains against the Canadian Dollar. Sterling is struggling to replicate this success against the rest of its peers this morning.

This comes amid speculation over the number of letters still needed to trigger a no confidence vote in Boris Johnson.

Some Conservatives have suggested the required number of letters could be reached early next week. At least 30 Tories are known to have summitted letters, just over half of the 54 needed to trigger a vote.

Johnson is also facing pressure over whether or not he breached ministerial code after being fined for his role in the ‘partygate’ scandal.

Lord Geidt, Johnson’s standards adviser has said it is a ‘legitimate question’. Johnson would normally be expected to resign if he is found to have broken the ministerial code.

Pound Canadian Dollar Forecast: Hawkish BoC to Bolster the ‘Loonie?

Still to come today is the Bank of Canada’s interest rate decision. The BoC is widely expected to raise interest rates by 50bps to 1.5% as it concludes its latest policy meeting.

With the hike largely priced in, any movement in the Pound Canadian Dollar exchange rate is likely to be driven by the BoC’s forward guidance.

Any signal from the BoC that it plans to deliver more rate hikes is likely to boost CAD exchange rates.

Meanwhile, the pound could struggle through the second half of the week in Holiday thinned trade as UK markets close for the extended jubilee weekend.

Matthew Andrews

Contact Matthew Andrews

Do Not Sell My Personal Information