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Pound to Canadian Dollar Edges Higher Despite Rising Oil Prices

February 9, 2021 - Written by John Cameron

GBP/CAD Exchange Rate Heads Higher as Canadian Markets Remain Cautious

The Pound to Canadian Dollar rose today, with the pairing currently fluctuating around CA$1.75.

The commodity-linked Canadian Dollar benefited from rising oil prices today, with prices of crude climbing back to pre-pandemic levels.

As a result, the oil-sensitive ‘Loonie’ has steady clawed back some of its losses as the outlook for the oil market appears increasingly positive.

Vandana Hari, founder of Singapore-based oil markets data firm Vanda Insights, explains:

‘The biggest driver for the latest surge in prices seen through last week was a sharp upturn in expectations for economic and oil demand recovery on signs that the coronavirus may finally be in retreat.’

CAD traders are also optimistic about the US economy – the world’s largest economy – as the 1.9 trillion-US-dollar Covid-19 stimulus package continues to progress through the US Congress.

However, Canadian markets have remained cautious with fears that new Covid-19 variants could threaten the efficacy of vaccines.

As a result, the CAD/GBP exchange rate is relatively subdued, as the outlook for Canada’s economy is heavily affected by global market movement.

Pound Rises as Over 18% of Brits Receive First Dose of Covid-19 Vaccine

Sterling rose against the ‘Loonie’ today as 18.9% of the British population have received at least one dose of the Covid-19 vaccine.

As a result, GBP investors are becoming more confident that the UK’s substantial Covid-19 vaccine rollout could aid Britain’s economic recovery in the months ahead.

In UK economic news, today saw the release of the latest British Retail Consortium’s (BRC) Retail Sales data, which beat forecasts but failed to buoy market confidence.

The latest retail data shows that the UK’s sales were their lowest since May last year.

Helen Dickinson, the BRC’s Chief Executive, explains:

‘January saw retail sales growth decline to its lowest level since May of last year. The current lockdown has hit non-essential retailers harder than in November, with the new variant hampering consumer confidence and leading customers to hold back on spending – especially on clothing and footwear.’

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

Pound investors will be looking ahead to tomorrow’s speech from the Bank of England’s (BoE) Governor, Andrew Bailey.

Any downbeat comments about the state of the British economy, however, would limit Sterling’s gains.

The UK’s Covid-19 situation will also continue to drive the GBP/CAD exchange rate this week.

As a result, we could see the Pound suffer if new coronavirus variants threaten the effectiveness of the UK’s Covid-19 rollout programme.

Meanwhile, the Canadian Dollar will continue to be driven by oil prices. If these continue to rise, however, then the ‘Loonie’ could creep higher against the Pound.

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