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Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rises as Covid-19 Vaccine Offers Hope for UK Economy

November 17, 2020 - Written by John Cameron

GBP/CAD Exchange Rate Edges Higher as Downing Street Reviews Covid-19 Lockdown

The Pound to Canadian Dollar (GBP/CAD) exchange rate rose by 0.4% today following news that the UK Government was reviewing England’s Covid-19 tiering system, buoying hopes of eased restrictions by Christmas. The pairing is currently trading around CA$1.735.

UK Government minister Robert Jenrick said that many ministers wanted to see a ‘significant easing’ of controls to provide ‘a somewhat more normal December’.

Consequently, demand for Sterling has increased on renewed hopes for Britain’s economic recovery in the months ahead.

British Health Secretary Matt Hancock said that there were ‘great advances’ in medical science towards a possible Covid-19 vaccine.

Mr Hancock added:

‘[W]e can see the candle of hope and we must do all that we can to nurture its flame.’

However, uncertainty over Brexit has capped some of GBP’s gains today, with the EU reported to be considering delaying its verdict on a trade agreement until as late as December 28th.

As a result, Pound investors are remaining cautious as UK-EU trade talks have failed to materialise any clear consensus in the past few months.

Canadian Dollar (CAD) Falls Despite Rising Oil Prices on Covid-19 Vaccine Hopes

The Canadian Dollar (CAD) dipped today despite the commodity-linked ‘Loonie’ being boosted by a rise in crude oil prices on hopes of a breakthrough Covid-19 vaccine.

ING analyst Warren Patterson explains:

‘Developments with regards to a vaccine are constructive for oil demand in the medium to long term. However, for the near term it changes little, with still plenty of concern over the demand impact from the latest wave of COVID-19.’

In Canadian economic news, today saw the release of the Housing Starts for October, which fell below forecasts at 214.9 thousand.

Meanwhile, CAD investors will be looking ahead today’s speech from the Bank of Canada’s (BoC) Governor of Tiff Macklem.

Any downbeat commentary about Canada’s economy or Covid-19 crisis would prove CAD-negative.

GBP/CAD Forecast: Could a Dovish Bank of England Drag Down Sterling?

Canadian Dollar (CAD) investors will be awaiting tomorrow’s release of Canada’s inflation data for October.

Any signs of deterioration in Canada’s economic outlook would however drag down the CAD/GBP exchange rate.

Pound (GBP) traders will also be looking ahead to a speech from Andrew Bailey, the Bank of England’s (BoE) Governor.

Again, any dovish commentary about the British economy would be GBP-negative.

Brexit developments will continue to drive the GBP/CAD exchange rate.

Any signs of Downing Street maintaining its hard-Brexit stance, therefore, would drag on Sterling.

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