Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Jumps as Oil Price
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate edged higher on Friday, leaving the pairing trading at around CA$ 1.7326.
Friday saw oil prices plummeted to their lowest level in more than a year while prices were also set for the largest weekly fall in over four years.
The spread of Covid-19 heightened fears global demand for oil will slide, weighing on the oil-sensitive ‘Loonie’.
Investors continued to worry as the coronavirus has spread beyond China, to more than 50 countries. Added to this, the number of reported cases outside of China has exceeded those reported inside the country.
However, some believe that the recent sell-offs will be reined in as fears over demand decrease.
According to Sukrit Vijayakar, director of energy consultancy Trifecta:
‘We have to believe that the Covid-19 virus will be contained sooner rather than later. I’m optimistic we should see some positive news by mid next week at the latest
‘Subsequently, the sudden drop in demand will rise back just as suddenly, to at least 75% to 90% of prior levels. The rise back will be spurred by current low prices.’
Sterling (GBP) Rises as UK Confidence Jumps to 18-Month High
The Pound rose against the New Zealand Dollar after data revealed that UK consumer confidence rose in February.
GfK showed that confidence rose to the highest level since August 2018, providing GBP with some support.
Confidence was supported by optimism about the UK economy, which increased the willingness to purchase big-ticket items.
Despite the UK being locked into a transition period ahead of UK-EU trade talks, recent data has suggested the economy is beginning to rebound.
However, GfK warned that the outbreak of coronavirus would start to impact consumers as the number of cases in the UK increased to 19.
Meanwhile, Bank of England (BoE) Governor, Mark Carney warned the country should prepare for an economic hit as the virus continues to spread.
During an interview with Sky News, he stated:
‘We’re not picking that up yet at all in the European and UK economic indicators, but if the world is slower than the UK, a very open economy, will have an impact.’
Pound Canadian Dollar Outlook: Weak Canadian GDP to Weigh on CAD
Looking ahead to this afternoon, the Canadian Dollar (CAD) could extend its losses against the Pound (GBP) following GDP growth figures.
If GDP disappoints in the final three months of 2019, the ‘Loonie’ will continue to decline.
Meanwhile, if oil prices continue to slide significantly, the oil-sensitive Canadian Dollar will remain under pressure.
If oil prices suffer the largest weekly fall in over four years, the Pound Canadian Dollar (GBP/CAD) exchange rate will rise higher.
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TAGS: Pound Canadian Dollar Forecasts