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Pound Canadian Dollar (GBP/CAD) Exchange Rate Steady as UK Construction PMIs Shows ‘Promising End’ to 2020

January 7, 2021 - Written by John Cameron

GBP/CAD Exchange Rate Rangebound as UK GPs and Pharmacies to Rollout Covid-19 Vaccine

The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.72.

Sterling benefited from news that UK GP’s surgeries and pharmacies would be allowed to rollout out the new Oxford/AstraZeneca Covid-19 vaccine.

As a result, GBP investors are becoming more hopeful that the UK could vaccinate large swathes of the vulnerable and at-risk population by mid-February.

Nevertheless, rising Covid-19 cases throughout England are dampening confidence in Sterling.

In UK economic data, today saw the release of December’s UK Construction PMI, which reassured markets at 54.6.

Tim Moore, Economics Director at IHS Markit, commented:

‘December data illustrated a positive end to the year for the UK construction sector, mostly fuelled by a sharp rebound in house building. Overall output growth has slowed in comparison to the catch-up phase last summer, but now it is encouraging to see the recovery driven by new projects and stronger underlying demand.’

Canadian Dollar (CAD) Steady as Oil Prices Steadily Rise

The Canadian Dollar (CAD) firmed today following this week’s news that Saudi Aribia will cut oil production in the next few months, buoying WTI prices beyond the key $50 per barrel.

As a result, demand for the commodity-linked ‘Loonie’ has increased, bolstering the CAD/GBP exchange rate.

Bjornar Tonhaugen, the head of oil markets at Rystad Energy, however, warned:

‘Saudi Arabia’s offer to compensate and voluntarily cut production did not take an official form. It was an offer that was probably meant to be blurry and subject to changes when it comes to the actual cuts when the time comes.’

In Canadian economic news, today saw the release of the latest Canadian exports figure for November, which confirmed consensus at $46.76 billion.

Benjamin Reitzes, Canadian Rates & Macro Strategist at BMO Capital Markets Economics, said:

‘While the trade deficit narrowed, it remains notably wider than pre-pandemic levels.’

Today saw the latest Canadian Ivey PMI figure for December fall below forecasts to 46.7.

This was the first contraction in Canada’s economic activity since May.

As a result, CAD investors are becoming increasingly concerned about the strength of the nation’s economy going into 2021.

GBP/CAD Outlook: Could Rising Canadian Unemployment Weaken the ‘Loonie’ on Friday?

Canadian Dollar (CAD) traders will be closely monitoring tomorrow’s release of the latest Canadian Unemployment Rate figure for December.

If this confirms consensus and rises, then we could see the CAD/GBP exchange rate begin to fall.

Tomorrow will also see the release of the latest Canadian New Change in Employment data for December.

Again, if this shows a bleak outlook for the Canadian economy going forward, we could see the ‘Loonie’ suffer.

The GBP/CAD exchange rate could head higher this week, however, if the UK Government’s mass vaccination programme appears to be on target for mid-February.

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