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Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Flat despite Rise in Oil Prices

April 12, 2019 - Written by John Cameron

Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted as Oil Prices Rise

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained flat, and the pairing is currently trading at an inter-bank rate of CA$1.7482.

On Friday, oil markets cemented their best run for more than three years, however the oil-sensitive ‘Loonie’ only edged up slightly against the Pound.

The rise was driven by involuntary supply cuts from Venezuela, Iran and Libya, supporting perceptions of a tightening market already underpinned by a deal reducing production from OPEC and its allies.

Speaking to the Reuters Global Oil forum, Strategist at BNP Paribas, Harry Tchilinguirian said:

‘We expect oil price to eventually move higher in Q2 as OPEC+ potentially runs the risk of over-tightening the market by maintaining its current course of action.’

Flat New House Pricing Index Leaves Canadian Dollar (CAD) Muted

On Thursday, Canada’s monthly New House Pricing Index was left flat in February.

The index was left flat for the sixth time in the last seven months, which likely dampened sentiment in the ‘Loonie’.

In a note, Senior Canada Economist as Capital Economics, Stephen Brown said:

‘The continued weakness of home sales suggests that March’s rebound in housing starts is unlikely to be sustained, while the subdued pace of house price inflation points to spending growth remaining weak.’

Sterling (GBP) Flat on New Halloween Brexit Extension

On Thursday the Pound (GBP) was left unimpressed by the news that the UK had accepted a six-month Brexit extension from the European Union.

The new deadline, 31 October prevents the UK from crashing out of the EU later this evening.

However, this does not completely reduce the risk of a no-deal Brexit as this remains the default position if Brexit deadlock in Parliament is unable to be broken.

Commenting on the extension, Head of Foreign Exchange Strategy at ING, Chris Turner said:

‘The extension is unlikely to improve business confidence much, thus limiting the upside to GBP.’

Pound Canadian Dollar Outlook: Will the GBP/CAD Exchange Rate Rise on Dovish BoC?

This evening the Canadian Dollar (CAD) could fall against the Pound (GBP) following a speech from the Deputy Governor of the Bank of Canada (BoC), Timothy Lane.

If Lane’s tone is dovish, and he mentions the risk of the global economic slowdown, the Canadian Dollar could fall.

Looking ahead to the start of next week’s session, the Bank of England’s (BoE) Jonathan Haskel is due to deliver a speech.

If Haskel focuses on the current Brexit uncertainty, the Pound Canadian Dollar (GBP/CAD) exchange rate is likely to slide.

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