August 6, 2019 - Written by John Cameron
STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Rises on Global Trade Turmoil and Lowering Oil Prices
GBP/CAD Exchange Rate Edges Higher as Oil Fears Dampen Market Confidence in ‘Loonie’
The Pound Canadian Dollar (GBP/CAD) exchange rate rose by 0.4% today, leaving the pairing fluctuating around CA$1.613.
The Canadian Dollar (CAD) fell against many of its competitors today as global trade tensions between the US and China have left ‘Loonie’ traders feeling jittery, as the Canadian economy is reliant on global trade.
As markets reacted to heightened risk-aversion the price of oil fell with Brent oil last seen trading at around $61 per barrel, providing downwards pressure on the oil-reliant Canadian Dollar.
Canadian Dollar traders are also increasingly worried that Iranian oil could flood markets, with China turning to purchasing oil from Iran and thus lowering the value of Canada’s main export.
Francisco Blanch, a Commodity Strategist at the Bank of America, said:
‘A Chinese decision to reinitiate Iran crude purchases could send oil prices into a tailspin.’
GBP/CAD Exchange Rate Rises despite Increasing No-Deal Brexit Likelihood
The Pound has benefited from global trade tensions overshadowing rising no-deal Brexit fears today.
These came following comments from the former Environment Secretary Michael Gove, who said he was ‘deeply saddened that the EU now seem to be refusing to negotiate with the UK’.
Mr Gove said:
‘[Prime Minister Boris Johnson] will apply all the energy of the government and ensure that in the spirit of friendliness we can negotiate a new deal. But one thing is clear: the old deal that was negotiated has failed to pass the House of Commons three times now, so we do need a new approach.’
Today also saw the publication of the UK BRC Like-For-Like Retail Sales for July, which improved from -1.6% to 0.1% – their lowest improvement in July since 1995.
Helen Dickinson, a Chief Executive at the BRC, said:
‘While retailers will welcome the return to growth, it has nonetheless been a punishing few months for the industry. The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.’
However, as no-deal Brexit fears are rising the Pound’s gains against the Canadian Dollar today are expected to be short-lived.
GBP/CAD Outlook: Sterling Could Begin to Sink on Heightening No-Deal Brexit Jitters
Canadian Dollar investors will be looking ahead to tomorrow’s publication of the Canadian Ivey Purchasing Managers Index for July, which is expected to improve from 52.3 to 53.
Meanwhile, Sterling traders will be looking ahead to tomorrow’s UK Halifax House Prices figures for July, which are expected to rise from -0.3% to 0.3%.
The GBP/CAD exchange rate is likely to become subdued over the next few days as no-deal Brexit fears are likely to begin got weigh on Sterling.
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts Pound Sterling Forecasts