GBP/CAD Exchange Rate Rangebound as Canadian Economy Shows ‘Resilience’ Going Forward
The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.751.
The Canadian Dollar (CAD) held steady today after the Bank of Canada Governor Stephen Poloz buoyed sentiment in the ‘Loonie’ after announcing that the Canadian economy could restart in ‘late May’.
Mr. Poloz was notably optimistic about Canada’s economic balance sheet, highlighting the good health of the economy going into the Covid-19 crisis:
‘We started this whole episode with our economy operating [at] full employment, at capacity and inflation on target, which is not something that was shared by many other countries.’
‘It’s like a person who is healthy and fit, has a better chance of shaking off the COVID-19 virus, so does a healthy, fit economy have more resilience as we go forward.’
However, the oil-sensitive Canadian Dollar continues to struggle on sinking oil prices as supply overwhelms demand. Consequently, the ‘Loonie’ is likely to dip into the weekend as Canada’s largest commodity continues to be challenged by the coronavirus pandemic.
Pound (GBP) Holds Steady as UK Enters Another Three Weeks of Lockdown
The Pound (GBP) struggled to gain today after yesterday saw the UK Foreign Secretary, Dominic Raab, announce another three-week nationwide lockdown to contain the spread of the coronavirus.
Mr. Raab said in yesterday’s No. 10 briefing:
‘We still don’t have the infection rate down as far as we need to.’
‘If we rush to relax the measures that we have in place we would risk wasting all the sacrifices and all the progress that has been made. That would risk a quick return to another lockdown with all the threat to life that a second peak to the virus would bring and all the economic damage that a second lockdown would carry.’
Sterling is also being held back by growing no-deal Brexit fears after Downing Street that it would not be seeking to extend the UK-EU transition period beyond the 31st December deadline.
Additionally, GBP investors are becoming increasingly anxious as uncertainty remains over the return of Prime Minister Boris Johnson, who is still recovering from the coronavirus following his release from St. Thomas Hospital last week.
With no clear leader, and two threats to the UK economy in the form of Brexit and the coronavirus, we expect to see the GBP/CAD exchange rate sink ahead of the weekend.
GBP/CAD Forecast: Could Sinking Oil Prices Send the Canadian Dollar Tumbling?
The Canadian Dollar (CAD) will remain sensitive to fluctuating oil prices into next week. Any sudden drops in crude prices – or the flare-up of another oil war – would prove CAD-negative.
Pound (GBP) investors will be eyeing the UK’s developments during the newly announced lockdown extension. If Britain’s economic outlook continues to deteriorate, with fears mounting over a possible no-deal Brexit, we could see Sterling begin to fall against the Canadian Dollar.
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