GBP/CAD Exchange Rate Sinks as Oil-Sensitive ‘Loonie’ Rises
The Pound Canadian Dollar (GBP/CAD) exchange rate fell by -0.85% today as the oil sensitive ‘Loonie’ recovers on a rebound of oil prices. The pairing is currently trading around CA$ 1.702.
Although oil prices are still trading below $ 30 a barrel today the recent free fall has shown some signs of stabilising. The risk-sensitive Canadian Dollar has benefited from some improvement in one of Canada’s largest commodities.
However, Commerzbank Analyst Carsten Fritsch was downbeat in his analysis, saying:
‘There is still every sign of a price war on the oil market. If the announced production increases are actually implemented, the price risks plunging further towards the $ 20 mark.’
The CAD/GBP exchange rate is likely to remain volatile this week as rising coronavirus fears and sinking oil prices are likely to keep the trade-correlated Canadian Dollar under pressure.
Abhi Rajendran, the Director of Research at Energy Intelligence, also noted that oil prices could hit the teens, adding that this could ‘even be low teens at the lowest’. As a result, we should expect further volatility for the oil-sensitive Canadian currency.
Pound (GBP) Exchange Rate Falls on UK Economic Recession Fears
The Pound (GBP) fell against a stronger Canadian Dollar (CAD) today as UK economic recession fears weigh on market appetite for Sterling.
Capital Economics’ chief economist Paul Dales was also pessimistic about the British economy, commenting:
‘By asking the public to work from home where possible and to avoid pubs, theatres and other social venues, the UK government has implemented measures to contain the spread of the coronavirus that will significantly reduce economic activity.’
‘With the peak of the virus yet to come, it is clear we are in the early days of a big recession.’
In UK economic news, today saw the release of January’s UK ILO Unemployment Rate report, which rose to a worse-than-expected 3.9%.
With UK unemployment expected to rise in the coming months due to the coronavirus crisis, this left many Sterling traders feeling jittery.
Sterling traders will be awaiting Chancellor Rishi Sunak’s announcement of the rescue package budget for the British economy today.
Any indications that the bailout is substantial would bolster the Pound as recession fears ease off.
GBP/CAD Outlook: Could Weak Oil Prices Sink the ‘Loonie’?
Canadian Dollar (CAD) investors will be awaiting tomorrow’s release of the Canadian inflation report for February. However, as the year-on-year gauge is expected to dip from 1.8% to 1.7% it is unlikely we will see the ‘Loonie’ make any significant gains.
Oil prices will continue to dictate the Canadian Dollar exchange rate. If we see oil prices begin to slide on coronavirus fears, we could see the oil-sensitive ‘Loonie’ begin to lose some of its gains against Sterling.
The GBP/CAD exchange rate will remain sensitive to Covid-19 developments this week. Any further signs that the UK could face a recession in the near-term would prove Pound-negative.
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts