Pound Canadian Dollar Exchange Rate Firms as Oil Prices Drop
The Pound Canadian Dollar (GBP/CAD) exchange rate is rallying this morning as a fall in oil prices triggers drags on the ‘Loonie’.
At the time of writing the GBP/CAD exchange rate is trading around CA$1.4820. A 0.4% increase from this morning’s opening rate.
Canadian Dollar (CAD) Falls in Tandem with Oil Prices
The Canadian Dollar (CAD) is dropping against most of its peers this morning as a fall in crude prices weighs on the oil-sensitive currency.
At the time of writing WTI crude oil prices are trading around $81 per barrel, down almost 2% on the day.
This continues the downtrend in oil prices as investors voice concerns that a looming global recession will lead to a slump in demand for the commodity.
Analysts at TDS suggest the threat of a recession, in addition to uncertainty in China will prevent oil prices from rallying in the short-medium term, suggesting:
‘Given that there is the possibility of a deep recession resulting from restrictive action by key central banks and continued uncertainty surrounding when China returns to normality, after COVID shutdowns, we don’t see a sustained rally.’
As such, the commodity linked ‘Lonnie’ is struggling against its peers this morning.
Pound (GBP) Volatile as Truss Defends Budget
The Pound (GBP) continues to trade with volatility this morning as UK Prime Minister Liz Truss finally breaks her silence on the mini-budget.
The budget, which released last Friday rocked markets as investors disapproved of tax cuts being funded by increased government borrowing. The Pound has traded with considerable volatility ever since.
Many investors and economists have been expecting Truss to perform a U-turn in the wake of such a poor reception. Especially after the Bank of England (BoE) had to intervene within the bond market yesterday to stop it from crashing.
The prime minister has broken her silence today, defending the unfunded tax cuts, saying:
‘This is the right plan.’
However, the former BoE Governor Sir Mark Carney, disagrees. He and many others agree that this fiscal plan is simply ‘undercutting’ the UK’s economic constitutions. This sentiment is being echoed across markets as the Pound remains well below its pre-budget levels.
Pound Canadian Exchange Rate Forecast: GDP Data to Cause Fresh Movement?
Later today, the GBP/CAD exchange rate could see fresh impetus for movement with the release of Canada’s latest GDP figures.
The figures are expected to report a contraction in domestic growth deepened in the month of August. This may raise concerns over the Bank of Canada’s (BoC) next interest rate hike and apply further pressure to the ‘Loonie’.
UK investors will also be focused on the final GDP print for the second quarter, which releases tomorrow. If the data confirms growth slumped from 0.8% to -0.1% then this Is likely to limit the Pound’s upside potential.
In the meantime, GBP exchange rates will likely continue to trade erratically amid concerns over UK fiscal policy.