Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Slips as Oil Prices Remain Steady
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate slumped on Monday, leaving the pairing trading at around CA$ 1.7013.
Oil prices remained steady on Monday, holding near three-month highs which buoyed the oil-sensitive Canadian Dollar.
Optimism over a nearing US-China trade deal buoyed prices, and commenting on this chief Asia market strategist at AxiTrader, Stephen Innes said:
‘Oil prices will continue to benefit from the positive developments in US-China trade.’
Meanwhile, earlier in this month OPEC along with other top oil-producing countries agreed to extend and further output cuts in the first quarter of 2020.
However, earlier today Russian Energy Minister Alexander Novak said that OPEC+ may consider easing output restrictions at their meeting in March.
Canadian Dollar (CAD) Rises despite Weak GDP
The Canadian Dollar edged higher against the Pound despite data revealing that Canadian GDP unexpectedly contracted in October.
This followed steep declines in both manufacturing and retail sales.
Statistics Canada revealed that the country’s GDP fell by -0.1% in October despite a forecast increase.
This was the first monthly decline in eight months, and annually the economy expanded by 1.2%.
Sterling (GBP) Falls as No-Deal Brexit Fears Bite
Last week saw Sterling slump against the ‘Loonie’, and the pairing continued its decline on Monday, falling to the lowest level since November.
On Friday the Pound clawed back some losses after parliament voted in favour of Boris Johnson’s Brexit deal, before hitting fresh lows at the start of this week.
While this created a sense of certainty about the UK departing the bloc on 31st January, the bill reignited no-deal Brexit fears once again.
Boris Johnson announced that there would not be an extension to any post-Brexit negotiations, which is due to end in December 2020.
Commenting on this, BMO Capital Markets’ European head of FX strategy. Stephen Gallo said:
‘The direction of the last few days has been downward as the market is concerned about post-Brexit negotiations but one wouldn’t draw too many conclusions about today’s moves as liquidity is poor.’
Pound Canadian Dollar Outlook: Quiet Week Ahead
Looking ahead, the Pound (GBP) is unlikely to claw back losses from the Canadian Dollar (CAD) as traders are likely to be more focused on the Christmas holiday break.
Commenting on this, Société Générale’s Kit Juckes noted:
‘We’ve made it past the shortest day, but markets are still struggling to wake up and the morning’s FX range could be covered by a handkerchief. Sterling’s bounced a bit […] the market’s got mince pies on the mind.’
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TAGS: Pound Canadian Dollar Forecasts