Pound Canadian Dollar (GBP/CAD) Exchange Rate Stabilises as GBP Investors React to UK U-turn
The Pound Canadian Dollar (GBP/CAD) exchange rate is stable this morning as a rebound in oil prices offset the UK government’s tax cut U-turn.
At the time of writing the GBP/CAD exchange rate was trading at around CA$1.5412, virtually unchanged from this morning’s opening rate.
Pound (GBP) Continues Recovery from Previous Losses following Government U-turn
The Pound (GBP) is trending broadly higher this morning, as the UK government makes a U-turn to scrap their plans for a 45p tax rate cut. GBP Investors reacted positively to this news.
Chancellor Kwasi Kwarteng stated:
‘It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing the country. As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate.’
Similarly, the UK’s bond market is strengthening again following these news, continuing work performed last week by the Bank of England (BoE) to calm the market after the mini-budget sent gilt prices tumbling.
The Pound is continuing to recover from its historic lows last week, with uncertainty over the UK Government’s fiscal policy being eased by conjunctive action from the BoE and the Chancellor.
Monday morning will see the release of the Manufacturing PMI, with a contraction expected for the second month in a row. This news may not put a dampener on Sterling’s recovery however, as the Government U-turn is likely to remain the more significant catalyst of movement for the Pound.
Canadian Dollar (CAD) Buoyed as Oil Prices Rise
The Canadian Dollar (CAD) is enjoying gains across the board as oil prices begin to make a rebound for the first time in 5 weeks, shoring up the oil-dependent ‘Loonie’ against many of its peers bar the recovering Pound (GBP).
WIT crude prices have surged over 4% to strike almost $83 a barrel this month, hitting its highest level in two weeks.
The uptick in oil comes as the OPEC cartel of oil producing countries is reportedly considering cutting daily oil production up to 1m barrels.
The bullish market mood caused by the rise in oil prices and easing on export inflation may see CAD continue to gain ground throughout the week ahead.
Pound Canadian Dollar Exchange Rate Forecast: Will Oil’s Recovery Bolster CAD?
Looking ahead, the Pound Canadian Dollar exchange rate could struggle to hold ground through today’s sessions should oil prices continue rising.
Further to this is today’s upcoming release of Canada’s manufacturing PMI. While the market forecasts a further deterioration in the manufacturing sector, output price inflation is expected to ease, which may work in favour of the export-dependent currency.
Further in the week, the Balance of Trade figures will release for Canada, which could see CAD impacted if the trade surplus falls below market expectations. Oil price gains may also continue to bolster the ‘Loonie’, should they continue.
With the Pound, as the currency returns to its previous figures following last week’s crash, it remains to be seen if this stability will remain.