March 22, 2021 – Written by John Cameron
Pound Canadian Dollar Falls as EU Threatens to Suspend Critical Vaccine Exports to UK
The Pound Canadian Dollar (GBP/CAD) exchange rate fell today as tensions between the UK and the EU continue to escalate after the EU threatened to ban importing AstraZeneca Covid-19 vaccines to the UK. The pairing is currently trading around CA$ 1.73.
Prime Minister Boris Johnson is now due to speak to EU leaders to stop the ban being imposed on crucial vaccines being exported to the UK.
UK Health Minister Helen Whately, was confident that the EU would stick by their original commitments, however, saying:
‘We expect the European Union to stick by their commitments and I’m sure the prime minister will be in contact with European counterparts – he speaks to European counterparts regularly – but I don’t think this debate is helpful to anybody.’
However, GBP investors are becoming concerned about the EU’s threat, seeing it as an obstacle to tackling cases of Covid-19 infections throughout the UK.
Presently Covid-19 infection rates have stabilised, while those hospitalised are continuing to fall.
Nevertheless, tensions between the UK and EU has dampened confidence in the outlook for the UK economy in the months ahead.
Canadian Dollar (CAD) Rises Despite Falling Oil Prices
The oil-sensitive Canadian Dollar (CAD) rose against the Pound (GBP) despite falling oil prices as WTI crude fell below $ 60 a barrel last week.
Canada’s retail sales fell below forecasts in January, leaving some ‘Loonie’ investors feeling cautious about the outlook for the nation’s economy in the months ahead.
Benjamin Reitzes, a rates, and macro strategist at Bank of Montreal, was however more confident about the data, commenting on February’s estimate:
‘The strong February estimate is welcome news – likely driven by a rebound in Canada’s two largest provinces – and bodes well for the economy as it continues to heal from last year’s trauma.’
However, CAD investors are also concerned about rising numbers of the coronavirus spreading throughout Canada.
Canada’s chief public health officer Dr Theresa Tam describes Canada’s Covid-19 situation:
‘In parts of Canada, variants of concern represent an increasingly high proportion of cases and are being associated with a greater number of outbreaks. If we can keep up with personal protective measures and limit our contacts for a final push to keep COVID-19 infection rates down as vaccine programs scale up, we can keep the path clear for vaccines to do their part.’
As a result, we could see the CAD/GBP exchange rate begin to struggle today if Covid-19 infections continue to rise.
Pound (GBP) investors will be awaiting tomorrow’s release of January’s ILO Unemployment Rate, which is expected to rise by 5.2%.
Any signs of an unemployment crisis in the UK, however, would drag down the Pound Canadian Dollar exchange rate.
Tomorrow will also see a speech from the Bank of England’s (BoE) Governor Andrew Bailey.
If his notably upbeat in his outlook for the UK economy, however, then the GBP/CAD exchange rate could begin to claw back some of its losses.
Canadian Dollar traders will be eyeing tomorrow’s speech from the Bank of Canada’s (BoC) Deputy Governor, Toni Gravelle.
The Pound to Canadian Dollar exchange rate could fall, however, if the BoC is notably more optimistic about the outlook for Canada’s economy.
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts