Pound Canadian Dollar (GBP/CAD) Exchange Rate Grinds Higher amid Slipping Oil Prices
The Pound Canadian Dollar (GBP/CAD) exchange rate is ticking higher this morning. Slipping oil prices are weighing down CAD.
At the time of writing, GBP/CAD is trading at around CA$1.6914, an increase of almost 0.2% from the morning’s opening rates.
Canadian Dollar (CAD) Undermined by Slipping Oil Prices
The Canadian Dollar (CAD) is seeing muted trade this morning, as oil prices begin to slip again. A lack of meaningful data releases may also be contributing to CAD’s lack of appeal this morning.
On Monday, wildfires prompted the shutdown of oil and gas producers in Alberta. While they have eased due to cooler weather, they may rage for some time.
The fires caused the shut in of at least 319,000 barrels of oil equivalent per day, roughly 3.7% of the country’s production.
Analysts at Stifel FirstEnergy commented:
‘While we remain optimistic for a safe and quick resumption of production, the impacts to some affected companies could be meaningful if volumes are impacted for an extended period of time.’
Adding further pressure to oil prices are concerns over US inflation and its potential impact on the global economy.
Similarly, US Crude inventories rose by around 3.6 million barrels in the week ending May 5th, which may indicate slipping demand. With demand in America appearing to weaken, prices are on the backfoot.
Pound (GBP) Limited amid Sombre Market Mood
The Pound (GBP) is seeing limited movement this morning, amid a lack of data releases. Because of this, external factors are likely keeping a lid on GBP’s movements.
The market mood is trending towards bearish trade, which could be limiting GBP due to its increasingly risk-sensitive nature.
Investors are awaiting this afternoon’s American consumer price index data. If inflation is staying elevated, the need for further tightening from the Federal Reserve is greater. This would place a dampener on global economic growth prospects.
However, rate hike bets ahead of tomorrow’s interest rate decision from the Bank of England (BoE) are likely keeping Sterling cushioned.
GBP/CAD Exchange Rate Forecast: BoE Hike in Focus
The Bank of England’s interest rate decision takes the stage for the Pound. Tomorrow, the BoE are expected to deliver a priced-in 25bps hike.
The key factor at play is likely to be any accompanying forward guidance. At the last hike, the BoE took a more hands-off approach which did GBP little favours. If they continue this more dovish angle, Sterling could be dented.
However, if they take a hawkish standpoint as inflation remains ultra-high, GBP could strengthen as investors bet on further hikes.
For the Canadian Dollar, in the absence of impactful data releases the oil-linked currency may trade on price dynamics.
Oil has seen volatile trade recently, and is currently falling again after a brief recovery amid inflation fears. If this continues, it may weigh on the ‘Loonie’.
Elsewhere, if the American inflation data due this afternoon lifts USD, CAD may follow suit due to its close correlation with the ‘Greenback’.