Pound Canadian Dollar (GBP/CAD) Exchange Rate Edges Higher as Oil Prices Tumble

April 27, 2020 - Written by John Cameron

STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Edges Higher as Oil Prices Tumble

Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Rises as Oil Prices Slump

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate edged higher this morning, leaving the pairing trading at around CA$1.7482.

The Canadian Dollar suffered some losses today after oil prices fell once again after concerns over small storage capacity and weaker global economic growth dominated markets.

Oil futures also marked their third straight week of losses last week, falling for the past eight out of nine weeks.

Investors were caught off guard last week after the May West Texas Intermediate contract tumbled into negative territory for the first time ever. The June WTI futures fell by around 14.3% a barrel this morning, which may have been caused by investors moving to later months to avoid the same fate.

As US futures led losses, prices slumped by over $2 a barrel as traders feared the storage at Cushing, Oklahoma would reach full capacity soon.

Commenting on this, Harry Tchilinguirian, global oil strategist at BNP Paribas in London said:

‘The market is very concerned of a repeat of negative pricing as the Cushing storage and delivery hub saturates. The shift of open interest away from June will have negative consequences for the liquidity of the contract, potentially leading to greater volatility in its price.’

Reports Britain Will Ease Lockdown Measures Boosts the Pound (GBP)

Meanwhile, Sterling edged higher today after an increase in optimism that Britain may soon ease its current lockdown measures.

According to national medical director of the country’s health service, the county is now seeing a lower number of people hospitalised due to Covid-19.

Risk appetite was also boosted after Italy announced it would begin to lift restrictions imposed around seven weeks ago.

Italian Prime Minister Giuseppe Conte said measures would be relaxed in Italy from the 4 May.

Meanwhile, confidence also improved after reports announced Prime Minister Boris Johnson had recovered from coronavirus and returned to work.

He is now expected to find a way towards easing the lockdown measures without triggering a second wave of Covid-19.

Commenting on this, Michael Hewson, chief market analyst at CMC Markets UK stated:

‘Attention will be on him, and in particular the government more broadly, to announce some sort of pathway out of lockdown, as it becomes increasingly apparent how much economic damage is being done to the UK economy.’

Pound Canadian Dollar Outlook: Oil Futures and Coronavirus Lockdowns in Focus

Looking ahead, the Pound (GBP) could continue to make gains against the Canadian Dollar (CAD) if oil prices continue to slump.

If US oil futures continue to decline and traders worry about US oil storage capacity, the oil-sensitive ‘Loonie’ will continue to suffer losses.

Meanwhile, GBP could benefit if risk sentiment improves as further countries including the UK announce the easing of coronavirus lockdown measures.

If risk appetite amongst traders improves, the Pound Canadian Dollar (GBP/CAD) exchange rate will edge higher.

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TAGS: Pound Canadian Dollar Forecasts