Pound to Canadian Dollar (GBP/CAD) Exchange Rate Steady as BoE Sees UK Economy on Road to Recovery

July 17, 2020 - Written by John Cameron

STORY LINK Pound to Canadian Dollar (GBP/CAD) Exchange Rate Steady as BoE Sees UK Economy on Road to Recovery

GBP/CAD Exchange Rate Rangebound as Boris Johnson Expects to See Normality Return by Christmas

The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently fluctuating around CA$1.70.

Sterling steadied against the ‘Loonie’ today after the Bank of England’s (BoE) Governor, Andrew Bailey, said that he sees the UK beginning to make a recovery from the Covid-19 crisis.

Mr Bailey commented during a webinar organised by the BoE:

‘We are seeing activity return. We are beginning to see this recovery.’

Today also saw Prime Minister Boris Johnson announced that he expects the UK to return to a semblance of ‘normality’ for Christmas. As a result, GBP investors are becoming more hopeful that Britain is on track for economic recovery in the months ahead.

Nevertheless, GBP has been held back by rising concerns for UK unemployment levels after yester day saw reports that nearly 650,000 workers had been laid back since the Covid-19 pandemic kicked off.

Samuel Tombs, chief economist at Pantheon Macroeconomics said:

‘The unemployment rate will surge over the coming months as people re-engage with the labour market and job losses crystallise when the [furlough] scheme ends.’

Canadian Dollar (CAD) Steady as Oil Prices Sink Amid Growing Concerns for Canada’s Economy

The Canadian Dollar (CAD) struggled to gain against the Pound (GBP) after the latest Canadian Wholesale Sales for May undercut forecasts at 5.7%. As a result, investors are becoming concerned that Canada’s economic recovery could be slower-than-expected.

The Bank of Canada (BoC) also recently reported that the Canadian economy could shrink by 7.8% this year.

Nonetheless, the BoC was also optimistic, saying:

‘This return to growth [of the Canadian economy] reflects the relaxation of necessary containment measures put in place to slow the spread of the coronavirus, combined with extraordinary fiscal and monetary policy support.’

The Canadian Dollar (CAD) has been compromised by falling oil prices today. With oil being one of Canada’s largest exports, this has dampened hopes for the nation’s economic recovery.

Analysts at Reuters commented:

‘Oil prices fell 1% on Thursday after OPEC+ agreed to ease record supply curbs and as new infections of the novel coronavirus continue to surge in the United States.’

GBP/CAD Outlook: Could Rising Oil Prices Boost the ‘Loonie’?

Pound (GBP) traders will be looking ahead to Monday’s speech by the Bank of England’s (BoE) Chief Economist, Andrew Haldane. If Mr Haldane is notably dovish about the British economy’s ability to recover from the Covid-19 crisis, then we could see Sterling suffer.

Canadian Dollar (CAD) investors will be paying close attention to Tuesday’s publication of the Canadian retail sales figures for May. However, if these confirm consensus and edge higher, then we could see the ‘Loonie’ rise.

The GBP/CAD exchange rate will be driven by oil prices and risk-sentiment next week. If oil prices rise, then we could see the Canadian Dollar begin to edge higher.

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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts