GBP/CAD Exchange Rate Falls as Rising Prices Boost Canadian Dollar
The Pound Canadian Dollar exchange rate fell by -0.3% today as oil prices climbed after a ship ran aground and blocked the Suez Cannel. The pairing is currently trading around CA$1.72.
Commenting on the boat’s impact on oil prices, Warren Patterson, head of commodities strategy for ING Group in Singapore, said:
‘It could be having a bit of an impact when you consider about 10% of total seaborne oil trade goes through the Suez Canal, but I imagine any disruption would be very temporary.’
However, with oil prices heading higher over concerns of the blockage, the oil-sensitive ‘Loonie’ has benefited, climbing higher against the Pound (GBP).
Will Sungchil Yun, a senior commodities analyst at VI Investment, Seoul, commented on the state of oil prices:
‘Oil’s had a deep correction because of near-term demand, but the outlook that consumption will improve remains valid in the longer term.’
Pound (GBP) Sinks Despite Strong UK PMI Data
The Pound (GBP) fell today despite strong preliminary UK Manufacturing and Services PMIs. The UK’s Services PMI beat forecasts, rising to 56.8.
Chris Williamson, Chief Business Economist at IHS Markit, commented:
‘The UK economy rebounded from two months of decline in March, with business activity growing at its fastest rate since last August as children returned to schools, businesses prepared for the reopening of the economy and the vaccine roll-out boosted confidence.’
UK business activity also rose at its fastest rate since August of last year.
As result, UK markets are becoming more optimistic about the reopening of the nation’s economy in the months ahead.
However, GBP investors are remaining notably cautious after Prime Minister Boris Johnson warned that the European Union’s (EU) third-wave of Covid-19 could ‘wash up’ in the UK.
Consequently, the Pound Canadian Dollar exchange rate failed to rise today, with UK markets instead opting for caution as coronavirus infection rates remain stable in Britain.
GBP/CAD Exchange Rate Forecast: Could a Dovish Bank of England Weaken the Pound?
Pound (GBP) traders will be awaiting tomorrow’s speech from the Bank of England’s (BoE) Governor, Andrew Bailey.
Any dovishness about the outlook for the UK’s economy, however, could further weigh on the Pound to Canadian Dollar exchange rate.
The Canadian Dollar will remain sensitive to oil prices this week. Any signs of rising oil prices would drive-up the oil-sensitive ‘Loonie’.
The Pound to Canadian Dollar exchange rate could continue to fall this week, however, if growing Covid-19 cases in Europe are perceived to threaten Britain in the months ahead.
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