Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as OPEC+ Members Overproduce
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained flat on Friday morning. This left the pairing trading at around CA$1.7418.
The oil-sensitive ‘Loonie’ remained flat against the Pound as oil prices held steady on Friday and were on track for a third consecutive weekly gain.
Prices were supported by major oil producers’ efforts to hold back on output due to concerns about the pace of the economic recovery from the coronavirus crisis.
Following a meeting earlier this week, an internal report from OPEC+ focused on ensuring members that had overproduced against commitments would cut their current output.
A report from Reuters found some members would need to cut output by 2.31 million barrels to make up for the recent oversupply.
AxiCorp market strategist Stephen Innes noted:
‘But with enforcement tactics reduced to merely public smearing of laggards or a very unlikely disbanding of the agreement, the proof will need to be in the pudding as it remains critical that non-compliant members toe the line to bring the markets closer to equilibrium.’
Iraq and Nigeria were the least compliant OPEC+ members, and even the United Arab Emirates which made additional cuts in June overproduced 50,000 barrels per day in the May to July period.
Sterling (GBP) Flat on Sharpest Increase Private Sector Output Since 2013
The Pound was offered some support today after the latest UK retail sales rose above their pre-coronavirus levels last month.
In the first full month that shops selling non-essentials were open, sales volumes rose by a better-than-expected 3.6% in July. This represented a strong recovery from the double-digit declines seen in April and May.
Meanwhile, the latest flash PMI surveys revealed activity in Britain’s services sector rebounded this month.
UK private sector output saw its sharpest increase in output since October 2013, although job shedding accelerated.
Britain’s flash PMI composite jumped to a 82-month high of 60.3 while the services sector accelerated to 72-mont high of 60.1.
Commenting on the latest flash PMI surveys, Group Director at CIPS, Duncan Brock said:
‘Driven by customer need and a greater appetite for spending, new order intakes across the sectors rose at the fastest rate since July 2014 as more projects started, staff returned and normality 2.0 was established. Manufacturing led the way with the strongest output growth since April 2014, and service companies reported the boost from government initiatives had brought more consumers back to restaurants and pubs as purse strings were loosened.
‘With the fastest rise in activity in the private sector since October 2013, this shows an encouraging speed towards recovery which belies the fact there are still some dark forces at play. Rising inflation, the sustainability of the UK economy during a global pandemic and the poor employment figures means we’re not out of the woods yet.’
Pound Canadian Dollar Outlook: Canadian Retail Sales in Focus
Looking ahead to this afternoon, the Canadian Dollar (CAD) could make some gains against the Pound (GBP) following the release of the latest economic data.
If Canada’s New Housing Price Index rises more than expected in July, it will offer the ‘Loonie’ an upswing of support.
Meanwhile, CAD could also receive a boost this afternoon if the latest round of retail sales impresses investors.
If June’s retail sales impress markets it will offer the ‘Loonie’ support. This is likely to send the Pound Canadian Dollar (GBP/CAD) exchange rate lower.
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