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Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Flat as Global Economic Slowdown Fears Cause Oil Prices to Slip

June 17, 2019 - Written by John Cameron

Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted as Tensions in the Middle East Increase

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained flat and the pairing is currently trading at an inter-bank rate of CA$1.6877.

On Monday, oil prices fell as international trade tensions overshadowed last week’s attacks on oil tankers in the Gulf of Oman.

Last week saw oil prices sent higher as supply fears were fuelled by the attacks which buoyed the oil-sensitive ‘Loonie’ last week.

It is likely the recent slump in oil prices, heightened tensions in the Middle East and Hong Kong, and India retaliatory trade tariffs on US goods weighed on the Canadian Dollar.

Tensions in the Middle East increased as Saudi Arabia joined the United States in blaming Iran for the attacks.

The Saudi Crown Prince Mohammed bin Salman blamed Iran in his interview with Newspaper, Asharq Al-Awsat, and further added:

‘The kingdom does not want a war in the region but it will not hesitate to deal with any threats to its people, its sovereignty, or its vital interests.’

Sterling (GBP) Flat as Front-Runner Johnson Receives Further Support

The Pound was left muted against the Canadian Dollar on Monday as no-deal Brexit fears increased.

Front-runner in the Conservative leadership contest, Boris Johnson gained further ground, and after being eliminated in the first ballot, Ester McVey announced her support.

Meanwhile, after dropping out of the race on Friday, Health Secretary Matt Hancock also announced he would be backing Johnson.

This likely dampened sentiment in Sterling despite Johnson’s claims that he is not aiming for a no-deal Brexit.

Brexit Pessimism Weighs on UK Business Investment

In a report from the British Chambers of Commerce (BCC) it is revealed that Brexit concerns will cause business investment to slide further this year.

The report also noted that investment will recover more slowly next year, as the BCC downgraded growth expectations from 1.3% to 1% in 2020.

Commenting on this, Head of Economics at BCC, Suren Thiru said:

‘The revisions to our forecast suggest that the UK economy is likely to remain on a disappointingly subdued growth path for some time to come.

‘The downward pressure on business activity and investment intensions from the unwinding of stocks is likely to be exacerbated by increasing cost pressures and Brexit uncertainty, slowing overall economic growth across the forecast period.’

Pound Canadian Dollar Outlook: Will GBP Fall on Disappointing UK Inflation

Looking ahead to Tuesday, the Canadian Dollar (CAD) could slip against the Pound (GBP) following the release of the Canadian manufacturing shipments.

If April’s manufacturing shipments do not rise as high as expected it could dampen sentiment in the ‘Loonie’.

Meanwhile, on Wednesday Sterling could slump following the release of the UK Consumer Price Index (CPI).

If May’s CPI does not rise as high as forecast, the Pound Sterling Canadian Dollar (GBP/CAD) exchange rate to slump.

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