Pound Canadian Dollar (GBP/CAD) Exchange Rate Weakens as Oil Prices Climb
Article updated 16:35, 9/10/2023:
The Pound Canadian Dollar (GBP/CAD) exchange rate is remaining low this afternoon, as oil prices continue to surge.
Owing to the Hamas-Israel conflict, investors are growing concerned that oil-producing territories will be embroiled, which could affect oil supplies.
With prices continuing to rise higher, the crude-sensitive Canadian Dollar (CAD) is enjoying support.
Additionally, as the events have firmly soured the market mood, the increasingly risk-sensitive Pound has been unable to gain a foothold.
At the time of writing, GBP/CAD is trading at around CA$1.6646, a fall of roughly 0.4% from the morning’s opening rates.
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Pound Canadian Dollar (GBP/CAD) Exchange Rate Drops as Hamas-Israel Conflict Sparks Oil Volatility
The Pound Canadian Dollar (GBP/CAD) exchange rate is falling this morning, as market volatility drives up oil prices.
At the time of writing, GBP/CAD is trading at around CA$1.6639, a fall of just under 0.4% from the morning’s opening rates.
Canadian Dollar (CAD) Climbs as Hamas-Israel Conflict Spurs Oil Price Rises
The crude-linked Canadian Dollar (CAD) is climbing today, as oil prices soar on the back of renewed market volatility.
Over the weekend, Hamas began an offensive against Israel, launching thousands of missiles at targets across the country. This marked the biggest escalation between the two sides for decades.
While Israel and Palestine aren’t oil producers, markets are concerned of the impact on oil producing countries such as Iran. While the country contributes up to 3% of global oil production, Iran is also a close ally of Palestine.
The concern is that further conflict could draw in Iran. Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, explains:
‘The attacks in Israel have sent the price of oil soaring, as investors assess the potential for the conflict to disrupt supply in the Middle East, if other countries are drawn in. With the Israeli government warning of a long and difficult war, there are concerns that deep and incessant retaliative strikes on Gaza could potentially bring Iran into the conflict and have an impact on the flow of energy in the region.’
At the time of writing, crude oil prices have surged to $85.762, a rise of over 3.5% from today’s opening rates.
Furthermore, the ‘Loonie’ could be seeing additional tailwinds from its close ties to the US Dollar (USD). The conflict has firmly soured the market mood, bringing safe-haven flows to USD.
Pound (GBP) Directionless amid Grim Market Mood
The Pound (GBP) is trading listlessly today, as the previous week’s lack of data rolls on. Because of this, Sterling is being left vulnerable to the downbeat market mood.
As an increasingly risk-sensitive currency, the Pound is unable to gain much ground this morning as markets reel over the escalating conflict in the middle east.
With the Israeli government declaring war, it is unlikely the conflict will settle any time soon. As such, Sterling may remain on the backfoot for most of today’s trade.
GBP/CAD Exchange Rate Forecast: UK Retail Data in Focus
Looking ahead for the Pound, the British Retail Consortium (BRC) are due to release September’s retail sales monitor overnight.
Economists anticipate a slowdown in sales on a yearly basis, falling from 4.3% increases to 2%. If this prints accurately, it could dent the Pound as it would indicate slowing levels of consumption in the UK.
Additionally, it the accompanying report highlights struggles within the UK retail sector, Sterling may weaken.
For the Canadian Dollar, data release are thin on the ground in the short term. However, if oil prices continue to climb amid market volatility, the commodity-sensitive ‘Loonie’ will likely follow suit.