Pound Canadian Dollar (GBP/CAD) Exchange Rate Sinks as Canadian Economy Benefits from Rising Oil Prices

June 14, 2019 - Written by John Cameron

STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Sinks as Canadian Economy Benefits from Rising Oil Prices

GBP/CAD Exchange Rate Falls despite Easing Canadian Vehicle Sales

The Pound Canadian Dollar (GBP/CAD) exchange rate is down today and is currently trading around CA$1.686 on the interbank market.

The Canadian Dollar (CAD) edged higher against the Pound (GBP) as oil prices increase following the attack on a Japanese oil tanker in the Gulf of Oman, with the volatile political climate in the Middle East benefiting the Canadian economy which relies heavily on oil production.

Dan McTeague, an Industry Expert at the website GasBuddy, urged caution.

He said:

‘The price would snap back violently. That could really cause a lot of problems for consumers. The knee-jerk reaction is more a response to the risks associated with higher tensions in the region and prospect of more attacks than immediate impact on oil supplies.’

Today saw the publication of the Canadian new motor vehicle sales for April, which eased to 185k on their previous 187k.

‘Loonie’ traders are concerned about ongoing US-China trade tensions, as China and the US lock horns once again, as each nation blames each other.

Liang Ming, Director of the Institute of International Trade, commented:

‘Now I think China has greater confidence than the U.S. At the G-20 we could have talks, but the precondition is that the U.S. shows good faith. If it continues to go backtracking on its own commitments, then we’d rather not have the talks.’

GBP/CAD Exchange Rate Decreases as Brexit Fears Wrack UK Businesses

The Pound weakened as focus shifted onto the ongoing Conservative Party leadership race.

Boris Johnson, who is a favourite for the next leadership, has turned down Sunday’s TV debate with his competitors, saying it would be too ‘cacophonous’.

Sterling has failed to benefit from the increasing no-deal fears, with Mr Johnson being a perceived hard-Brexiter who will likely force a chaotic exit in October – if need be.

Fears have risen following the Institute of Directors (IoD), the UK’s employers group, has urged its members to step up no-deal preparations.

Edwin Morgan, the Iod’s Interim Director General, said:

‘If businesses can’t have faith in politicians that means they have to look out for themselves. With business costs rising in many quarters, and management time precious, it’s understandable that firms don’t want to put resources towards preparing for something we still hope won’t happen.’

GBP/CAD Forecast: Sterling Could Fall on Heightened Brexit Fears

Sterling traders are looking ahead to Monday’s inflation report hearings report. Any dovish comments could weaken the GBP/CAD exchange rate further.

Canadian Dollar investors will be looking to Tuesday’s publication of the Canadian manufacturing shipments figures for April, which are forecast to ease.

The Pound Canadian Dollar (GBP/CAD) exchange rate will remain sensitive to political developments, and the Conservative leadership race will remain in the spotlight.

Any indications of an increasingly harsh stance on Brexit from Boris Johnson could, however, see no-deal fears rise, weakening GBP.

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