Pound Canadian Dollar (GBP/CAD) Exchange Rate Fluctuates as Investors Evaluate Energy Package
The Pound Canadian Dollar (GBP/CAD) exchange rate has wavered today as investors adjust expectations after Liz Truss unveiled her energy package.
At the time of writing the GBP/CAD exchange rate is trading at around CA$1.5065, after hitting an earlier high of CA$1.5128.
Pound (GBP) Volatile as Investors Digest Truss Energy Package
The Pound (GBP) is volatile this morning as investors adjusts expectations in response to Liz Truss’s energy package. GBP initially strengthened but has since trimmed its gains.
This week’s trading has been volatile due to Truss becoming prime minister, with markets unsure about the potential implications for the UK’s economy.
Truss announced an energy package on Thursday, estimated to cost around £130bn. The package seems to be improving economic sentiment in the UK.
Some economists have revised their inflation expectations. Now inflation is estimated to peak below 12% in the second quarter of 2023 instead of 18%.
Similarly, growth is expected to improve over the coming months as consumers regain more disposable income. As a result, economists suspect that the UK recession will not be as bad as first feared.
However, the Pound is still volatile as investors are concerned about the cost of the package. The Treasury is yet to announce details on how the spending plan will be funded.
Adding to this wariness is the passing of Queen Elizabeth II. The Queen has been a source of stability in the UK, and her death coincides with a period of deep uncertainty.
Canadian Dollar (CAD) Mixed as Oil Prices Rise
Meanwhile, the Canadian Dollar (CAD) has managed to regain lost ground against the Pound amid a recovery in oil prices
After experiencing a dip in pricing this morning, oil is now climbing higher. At the time of writing, WTI crude is approximately $85.14 per barrel, up 1.95% on the day.
This rally in oil prices, after a week of losses, is supporting the commodity-linked ‘Loonie’. Oil exports are important for Canada’s economy, so stronger oil prices tend to support CAD exchange rates.
As a result, the Canadian Dollar is recouping some of its earlier losses against the Pound.
Pound Canadian Dollar Forecast: Jobs Data to Impact CAD?
The GBP/CAD exchange rate might see some significant movement during trading today as Canadian data is released over lunchtime.
Economists expect Canada’s latest unemployment rate to rise by 0.1 percentage points. If figures print as forecast then CAD may pull back. However, if the data is better than expected CAD could gain more support.
Meanwhile, if oil prices continue to rise then the ‘Loonie’ may make further gains.
With no UK data set to release until Monday the Pound could remain volatile as economists and investors continue to evaluate the validity of Liz Truss’s energy plan.
In addition, the impact of the ten-day mourning period for the Queen could cause more volatility. At the time of writing, the Bank of England (BoE) has announced it will delay its interest rate decision by one week.