GBP/CAD Exchange Rate as Bank of England Holds Interest Rates
The Pound to Canadian Dollar (GBP/CAD) exchange rate rose by 0.3% today, with the pairing currently trading around CA$1.72.
The Pound (GBP) rose today after the Bank of England (BoE) left interest rates on hold at 0.1%, saying that the UK economy could shrink by ‘a little over 1%’ this quarter.
Jeremy Thomson-Cook, chief economist at Equals Group, said that today’s BoE meeting ‘underscores the uncertain optimism that many feel heading in to 2021.’
Mr Thomson Cook added:
‘Whilst the vaccine is likely to “reduce downside economic risks”, the continued spread of Covid-19 and further lockdowns on the horizon mean the UK may struggle to return to meaningful growth until the Spring.’
Nonetheless, Brexit deal hopes have driven the GBP/CAD exchange rate today.
Michel Barnier, the EU’s Chief Negotiator, said that UK-EU talks had made ‘good progress’ despite remaining stumbling blocks.
As a result, GBP investors are now more optimistic that talks between the two sides could result in a trade deal ahead of January 1st.
Canadian Dollar (CAD) Slips as Oil Prices Drop as Europe is Due to Re-Enter Lockdown
The Canadian Dollar (CAD) slipped today as oil prices fell slightly, weakening demand for the commodity linked ‘Loonie’.
Oil prices were capped by gains in US crude inventories and intensified coronavirus lockdowns in Europe.
Yesterday saw the release of October’s Canadian Wholesale Sales, however, which beat forecasts and rose by 1%.
Nonetheless, the outlook for Canada’s economy remains largely uncertain, as Europe faces further lockdowns next month which could limit demand for oil.
In Canadian economic news, today saw the release of November’s ADP Employment Change data, which rose from -79.5 thousand to 40.8 thousand.
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, commented:
‘The job market posted employment growth in November. Job gains were seen in the professional services and finance and trade sectors as a result of the ease of restrictions on businesses and social activities.’
GBP/CAD Outlook: Brexit Developments UK Consumer Confidence in Focus
Pound (GBP) traders will be awaiting tomorrow’s release of the UK GfK Consumer Confidence data for December.
Any improvement in the outlook for Britain’s economy this month would be GBP-positive.
Tomorrow will also see the latest UK Retail Sales data for November.
If these have been severely impacted by Covid-19 lockdowns, then we could see GBP suffer.
Brexit developments will continue to drive the GBP/CAD exchange rate this week.
As a result, we could see Sterling head higher if the odds of a post-Brexit trade deal continue to rise.
The Canadian Dollar (CAD) will remain sensitive to oil prices. Consequently, we could see the ‘Loonie’ continue to sink if the price of oil drops.
In Canadian economic news, tomorrow will see the release of October’s Retail Sales, which are expected to rise by 0.2%.
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