Pound Canadian Dollar (GBP/CAD) Exchange Rate is Fluctuating as UK Domestic Woes Take Centre Stage
The Pound Canadian Dollar (GBP/CAD) exchange rate zigzags amid ongoing UK political uncertainty, social unrest, and climbing oil prices.
At time of writing, the GBP/CAD exchange rate is around CA$1.56, relatively unchanged from this morning’s opening levels.
Pound (GBP) Wavers Under Weight of Political and Social Turmoil
The Pound (GBP) is struggling to find demand today as several headwinds persist amid a thin data calendar.
The ‘summer of discontent’ is set to worsen as unions have warned the UK that it could be facing a general strike this year. Much of Britain’s railway network ground to a halt on Wednesday when 40,000 workers went on strike in disputes over working conditions and pay. Railway workers have since agreed to further walkouts in August.
Adding fuel to the fire was leadership candidate Liz Truss saying that she will attack trade union rights if she were to become Prime Minister. Mick Lynch, the Rail, Maritime and Transport (RMT) chief, has called for a general strike if such a move materialised:
‘The proposals by Liz Truss amount to the biggest attack on trade union and civil rights since labour unions were legalised in 1871.
‘If these proposals become law, there will be the biggest resistance mounted by the entire trade union movement.’
Lending considerable support to the Pound is growing expectations of the Bank of England (BoE) to further increase interest rates as inflation threatens to wade into double-digit territory. A 50bps rate hike is all but priced in at the next policy meeting, propping up Sterling.
Canadian Dollar (CAD) Fluctuates Despite Climbing Oil Prices
The Canadian Dollar (CAD) is finding modest support today as crude oil prices continue to climb.
Crude oil exports soared to an all-time high last week amid reduced imports from Russia to Europe. With the ongoing Ukraine crisis, international refiners will continue to stock up on WTI crude, buoying the commodity-linked Canadian Dollar.
Elsewhere, expectations are mounting for another bold 100bps rate hike by the Bank of Canada (BoC), underpinning the ‘Loonie’. Hawkish comments from the BoC have buoyed investors’ spirits as the central bank aims to act swiftly and curb inflation before a wage price spiral kicks in.
Pound Dollar Exchange Rate Forecast: Contraction in Canadian Economy to Boost the Pound?
With data remaining thin on the ground, the printing of Canadian GDP on Friday could inspire further movement. If final readings prove accurate, the economy likely contracted by 0.2% in May, with an expected stagnation in June.
Meanwhile, consumer credit figures will be released on Friday, with experts predicting borrowing figures to tick upwards to £1Bn. As the cost-of-living crisis worsens, consumer debt is expected to continue to skyrocket.