October 26, 2020 - Written by John Cameron
STORY LINK Pound to Canadian Dollar Exchange Rate Edges Higher as Oil Prices Slide on Covid-19 Concerns
GBP/CAD Exchange Rate Rises as Oil Prices Fall
The Pound to Canadian Dollar (GBP/CAD) exchange rate rose by 0.4% today, with the pairing currently trading around CA$1.718.
The Canadian Dollar (CAD) suffered today as oil prices dropped by 3% owing to rising production in Libya and fading prospects of a pre-election US stimulus package.
As a result, appetite for the commodity-correlated ‘Loonie’ has suffered as oil prices continue to dip on growing global economic uncertainties surrounding the Covid-19 pandemic.
Meanwhile, CAD investors are awaiting tomorrow’s interest rate decision from the Bank of Canada (BoC).
As a result, Canadian markets are remaining cautious as the outlook for the nation’s economy remains uncertain as the US presidential elections draw closer.
Shaun Osborne, a chief financial strategist at Scotiabank, commented:
‘Focus will fall mainly on the risk environment and how political developments (or the lack of them) affect sentiment. The Bank of Canada policy meeting and MPR will provide Governor Macklem an opportunity to provide some colour on prospects but we doubt he will be too explicit, given prevailing uncertainties. There is no expectation of a rate cut and little sign of a desire to formally lift the pace of asset purchases.’
Pound (GBP) Edges Higher on Brexit Talk Extension
Sterling rose today following news that post-Brexit trade talks between the UK and the EU would be extended until this Wednesday.
Consequently, GBP edged higher against many of its competitors on renewed hopes that the two sides could secure a post-Brexit trade deal.
Nevertheless, Downing Street has warned that ‘time is very short’ and that there are ‘significant gaps’ in the trade deal so far reached with EU negotiators.
Prime Minister Boris Johnson’s spokesman said:
‘It’s the first time that we have been negotiating on legal texts and across all areas at the same time and we have welcomed that fact.
‘There is also much work to be done if we’re going to bridge what are the significant gaps that remain between our positions in the most difficult areas, and time is very short.’
However, Britain’s rising Covid-19 cases is leaving many GBP investors feeling cautious, as the outlook for UK economy remains largely uncertain.
GBP/CAD Forecast: Bank of Canada’s Interest Rate Decision in Focus
Canadian Dollar (CAD) investors will be awaiting Wednesday’s interest rate decision from the Bank of Canada, which is expected to hold at 0.25%.
However, any dovish comments in the Canadian national bank’s press conference would drag down the ‘Loonie’.
Sterling traders will be awaiting progress reports on Brexit talks.
As a result, we could see the GBP/CAD exchange rate head higher if UK-EU talks progress towards a possible post-Brexit trade deal.
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