Pound Canadian Dollar (GBP/CAD) Exchange Rate Falls as Oil Markets React to OPEC Decision
The Pound Canadian Dollar (GBP/CAD) exchange rate is declining today as the Organization of the Petroleum Exporting Countries (OPEC) agreed to stick with plans to cut crude oil production levels.
At the time of writing the GBP/CAD exchange rate is trading around CA$1.6477, which is roughly down 0.4% from this morning’s opening rate.
Canadian Dollar (CAD) Gains Ground as OPEC Retains Output Cuts
The oil-linked Canadian Dollar (CAD) is finding modest support this morning, underpinned by OPEC’s Sunday meeting.
At the time of writing, crude oil is trading around $87 per barrel, pushed higher by OPEC’s desire to stick with plans to cut output. Whilst the decision received push back, the organisation stuck to its plans, saying it would take ‘immediate’ action to stabilise global oil markets if needed.
Commenting on the decision Srijan Katyal, Global Head of Strategy & Trading Services at brokerage ADSS, said:
‘By keeping production flat, OPEC+ have signalled a measured approach, not guided by speculation related to a demand slump in China, a weakened dollar, or even the relatively low prices for oil seen in recent weeks.’
Also driving up oil prices and supporting CAD is the EU imposing sanctions on Russian oil. A $60 price cap has been placed on Russian crude to restrict Moscow’s ability to finance its war in Ukraine.
Pound (GBP) Struggles despite Services PMI Results
The Pound (GBP) is lacking support this morning as the UK’s services PMI printed as expected.
The finalised figures for November remained unchanged, confirming a further contraction in UK service-sector activity.
Commenting on the PMI Dr John Glen, Chief Economist at Chartered Institute of Procurement and Supply (CIPS), said:
‘A stalling service sector delivered a mostly joyless result in November with another decline in overall activity. Businesses are trying to balance their rising costs amidst intense competition’.
Also adding strain to the Pound are this morning’s bleak domestic headlines. According to the Confederation of British Industry’s (CBI) latest economic forecast, the UK recession has already begun and could last until Q4 for 2023.
The CBI also said that the inflation shock and the recession could cause a year-long drop in consumer spending as expendable income is further eroded. This, combined with the threat of further businesses collapsing, is weighing on GBP today.
Pound Canadian Dollar Exchange Rate Forecast: GBP to Dip amid Retail Sales?
Looking ahead, the Pound Canadian Dollar exchange rate could be driven by the UK retail sales data.
Overnight on Tuesday, the British Retail Consortium’s (BRC) retail sales monitor is due. The figures are expected to print a 0.6% increase. Whilst retail sales are expected to rise, they are significantly lower than previous months. This could weigh on the Pound as recession fears continue to grow.
On Tuesday daytime, Canada’s balance of trade report could impact CAD exchange rates. Will a rise in Canada’s trade surplus lift the commodity- and export-linked ‘Loonie’?