April 1, 2020 - Written by John Cameron
STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Rallies as Oil Prices Near 18-Year Low
Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate as Crude Oil Suffers Largest Quarterly Loss
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate rallied this morning, rising by around 1%. This left the pairing trading at around CA$1.7636.
The oil-sensitive ‘Loonie’ suffered losses today after oil slumped to $25 a barrel, and was within sight of its lowest in 18 years.
The slump in prices followed a US report showing a large rise in US inventories, and prices were also weighed down as the rift within OPEC widened.
The oil market has been hammered by pledges of increased output from Russia and Saudi Arabia weighed on prices following the collapse of a supply pact.
Data also revealed that global benchmark Brent crude plummeted 66% in the first three months of 2020, making this the largest ever quarterly loss.
Commenting on this, Bjornar Tonhaugen of Rystad Energy noted:
‘April will be one of the toughest months in history for oil and this is no April fool’s joke.
‘The market is oversupplied in April to the tune of 25 million barrels per day. There’s nowhere to hide from this tsunami of oversupply.’
‘Loonie’ sentiment remained under pressure as reports revealed that Saudi Arabia and Russia are not holding talks about the oil market.
Added to this, Kremlin spokesman Dmitry Peskov said President Vladimir Putin has no immediate plans to have a phone call with Saudi leadership.
Sterling (GBP) Rises despite Business Optimism Plummeting to Series Low
Meanwhile, Sterling was able to make gains against the Canadian Dollar despite weak manufacturing PMI data.
Markit’s PMI survey showed that business optimism within the manufacturing sector plummeted to a record low, while supply chain disruption intensified.
March’s PMI slumped to 47.8, down from earlier flash estimates of 48 as the survey showed manufacturing output and new orders fell at the fastest rate since mid-2012.
Commenting on this morning’s data, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply stated:
‘The manufacturing sector was knocked sideways by the impact of Covid-19 and into contraction territory, experiencing some of the most challenging trading conditions since PMI records began.
‘With supply chains crumbling around the world, we can only expect a worsening outlook next month as increasingly necessary lockdown measures squeeze manufacturing production. Only creative and agile thinking, new products and approaches will see the sector through the turbulence ahead.’
Pound Canadian Dollar Outlook: Will the Oil-Sensitive ‘Loonie’ Sink Further?
Looking ahead to this afternoon, the Canadian Dollar (CAD) could suffer further losses against the Pound (GBP) following the release of Canada’s manufacturing PMI data.
If March’s manufacturing PMI plummets further into contraction than expected, the ‘Loonie’ will suffer a further blow.
Meanwhile, if oil prices continue to slide, this could send the oil-sensitive Canadian Dollar even lower.
If tensions between Saudi Arabia and Russia heighten and investors fret over global oil demand, the Pound Canadian Dollar (GBP/CAD) exchange rate will extend today’s gains.
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TAGS: Pound Canadian Dollar Forecasts