Pound Canadian Dollar (GBP/CAD) Exchange Rate Rises as Tumbling Oil Prices Weaken ‘Loonie’

April 1, 2020 – Written by John Cameron

GBP/CAD Exchange Rate Edges Higher, Sinking Oil Prices Drag Down CAD


The Pound to Canadian Dollar (GBP/CAD) exchange rate rose by 0.6% today as tumbling oil prices continue to weigh on the oil-sensitive ‘Loonie. The pairing is currently trading around CA$ 1.757.

Analysts at JBC Energy echoed Canadian Dollar investors’ concerns, saying:

‘Demand is falling so fast relative to supply that very soon many producers’ main issue is not going to be whether they can ensure operating profit but rather if they can find an outlet for their crude.’

The Canadian Dollar (CAD) is suffering after Canada’s Western Canada Select (WCS) recorded record-low prices on Monday, with barrels hitting around $ 3.82 per barrel.

Canada’s economy is particularly sensitive to oil prices and slumps in global demand, thus leaving the CAD/GBP exchange rate subdued this afternoon.

Today also saw the publication of Canada’s Markit Manufacturing PMI fall deeper into contraction territory. The figure fell from 51.8 to a worse-than-expected 46.1.

Tim Moore, Economics Director at the IHS Markit, commented on the report:

‘Canadian manufacturers reported the steepest downturns in production, new orders and employment for at least nine-and-a-half years in March.’

‘Shrinking customer demand was almost exclusively attributed to production stoppages at home and abroad amid emergency public health measures to halt the COVID-19 pandemic.’

GBP/CAD Exchange Rate Rises as UK Banks Slash Dividends to Shareholders


The Pound (GBP) rose against the Canadian Dollar (CAD) today after banks agreed to slash dividends to shareholders, increasing the amount of cash available to help boost the UK economy after the coronavirus outbreak.

The Bank of England’s (BoE) Prudential Regulation Authority said in its statement:

‘Although the decisions taken today will result in shareholders not receiving dividends, they are a sensible precautionary step given the unique role that banks need to play in supporting the wider economy through a period of economic disruption.’

Sterling has also benefited from hopes of an extension to UK-EU trade talks. Prime Minister Boris Johnson is now expected to delay negotiations between the two powers until further notice, thus propping up the Pound on increased odds of a trade deal being secure either next year or beyond.

The GBP/CAD exchange rate also edged higher despite today’s release of March’s UK Markit Manufacturing PMI, which fell deeper into contraction at 47.8.

Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, commented:

‘With supply chains crumbling around the world, we can only expect a worsening outlook next month as increasingly necessary lockdown measures squeeze manufacturing production. Only creative and agile thinking, new products and approaches will see the sector through the turbulence ahead.’

GBP/CAD Forecast: Could ‘Loonie’ Sink on February’s Weak Trade Report?


Canadian Dollar (CAD) investors will be awaiting tomorrow’s release of the Canadian International Merchandise Trade report for February. However, as this expected to fall by $ -1.87 billion, the ‘Loonie’ is likely to continue to fall against Sterling.

The Pound (GBP) will likely perform more strongly against the risk-sensitive Canadian Dollar this week. Any signs of the UK economy coming under further strains from its nationwide lockdown, however, would clip some of the GBP/CAD exchange rate’s gains.

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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts