Pound Canadian Dollar Exchange Rate Firms as Oil Prices Stumble
The Pound Canadian Dollar (GBP/CAD) exchange rate is strengthening this morning as a drop in crude oil prices is dragging on the commodity-linked ‘Loonie’.
At the time of writing the GBP/CAD exchange rate is trading at around CA$1.5293, which shows increase of 0.3% from this morning’s opening numbers.
Canadian Dollar (CAD) Sunk by Rising Oil Prices
The Canadian Dollar (CAD) is on the backfoot this morning. Another sizable drop in crude prices taking its toll on the oil-sensitive ‘Loonie’.
WTI crude prices fell to a new tow-week low of $87 per barrel this morning. Fears that a global recession will hit demand are offsetting concerns over tighter supply. CAD exchange rates also remain suppressed in the wake of Canada’s latest GDP figures.
Data released yesterday afternoon reported the Canadian economy continued to grow in the second quarter, but at a more modest pace than forecast.
A surprise contraction of growth in July’s preliminary GDP also dampened expectations for the third quarter.
In the absence of any notable data the Canadian Dollar may remain at the mercy of oil price dynamics through the remainder of today’s session.
Pound (GBP) Gains Capped by Energy Crisis and Mixed Manufacturing PMI
The Pound (GBP) has attracted some support this morning, despite ongoing UK economic jitters.
Anxiety over the UK’s economic state continues to grow amid fears over the energy price crisis and pressures on consumer spending. The Pound dropped below $1.16 against the US Dollar (USD) this morning for the first time since 2016.
As businesses begin to feel the pinch of the energy crisis Ovo Energy, the third largest energy supplier in the UK has proposed a ‘progressive scheme’ to rein in energy costs for Britain’s poorest households.
The dower economic sentiment is supported by the latest global manufacturing PMI for August. The data printed better than expected. The finalised services index dipped from 52.1 to 47.3, which the preliminary reading of 46. Whilst not as poor as expected any figure below 50 denotes a contraction.
Rob Dobson, Director at S&P Global Market Intelligence, said:
‘August saw the UK manufacturing sector suffer its steepest downturn since the first COVID-19 lockdown. Output and new orders contracted at the fastest rates since May 2020, as inflows of work from both domestic and export markets slumped sharply lower.’
Will these better-than-expected figures and the Ovo’s proposed energy scheme be enough to cheer GBP investors today? Or will the energy crisis cap ‘Sterling’ gains?
Pound Canadian Forecast: Will CAD Maintain its Poor Trading Streak?
Looking ahead, the Pound Canadian Dollar exchange rate may remain on the front foot so long as oil prices continue to soften.
Canadian data pertaining to labour productivity may also drag on CAD. Productivity is forecast to rise from -0.5% to -0.3%, but the shift will likely do little to cheer investors as they struggle to stay afloat in amid volatile oil prices.
Meanwhile, a lull in notable GBP data may see the Pound struggle to find momentum in the latter half of the week, particularly amid ongoing political uncertainty.