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Pound to Canadian Dollar (GBP/CAD) Exchange Rate Steady as UK’s Search for Brazilian Coronavirus Variant Continues

March 2, 2021 - Written by John Cameron

GBP/CAD Exchange Rate Rangebound as UK House Prices Rise in February

The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today as the search for the UK’s missing Brazilian Covid-19 variant is narrowed down to the south-east. The pairing is currently fluctuating around CA$1.76.

As a result, Sterling investors are remaining cautious as the Brazilian variant could cause a problem for the effectiveness of the UK’s Covid-19 vaccination further down the line.

According to researchers, the original variant was found in Manaus Brazil and can evade 25% to 61% of the protection of people living in the Amazonian city.

Dr Nuno Faria of the MRC Centre for Global Infectious Disease Analysis at Imperial College London, explains:

‘If 100 people were infected in Manaus last year, somewhere between 25 and 61 of them are susceptible to reinfection by [the] P1 [coronavirus variant].

‘We caution, however, that our results from analysis should not be generalised to other epidemiological contexts and/or other variants of concern.’

In UK economic data, today saw the publication of the UK Nationwide Housing Prices data for February, which rose by 0.7% month-on-month.

Robert Gardner, the Nationwide chief economist, said:

‘The outlook for the housing market is unusually uncertain. There is scope for shifting housing preferences to continue to boost activity, especially if there is frther policy support in the budget. Nevertheless, if labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead.’

Consequently, GBP investors are becoming more cautious about the economy ahead of Chancellor Rishi Sunak’s 2021 Budget announcement on Wednesday.

Canadian Dollar (CAD) Falls as Canada’s GDP Falls Below Forecasts in December

The Canadian Dollar struggled today following the publication of Canada’s Gross Domestic Product data for December, which fell below forecasts from 0.8% to 0.1%.

Statistics Canada commented on the figure:

‘This eighth consecutive monthly increase continued to offset the steepest drops on record in Canadian economic activity in March and April. Nevertheless, total economic activity was about 3% below February’s pre-pandemic level.’

As a result, ‘Loonie’ traders are more concerned that Canada’s economy could get off to a slow start this year.

However, this week’s rebound in oil prices has managed to stabilise the CAD/GBP exchange rate.

The commodity-linked Canadian Dollar has benefited from a spike in oil prices following the success of US President Joe Biden’s $1.9 trillion Covid-19 stimulus plan in the House of Representatives.

GBP/CAD Exchange Rate Outlook: Could Rising Oil Prices Boost the ‘Loonie’ This Week?

Canadian Dollar traders are awaiting tomorrow’s release of the latest Canadian Building Permits figure for January.

Any improvement in the outlook for Canada’s economic performance would be CAD-positive.

Oil prices will also continue to dictate the CAD/GBP exchange rate this week.

Any signs that the US Covid-19 stimulus package will likely pass through unchallenged would boost oil prices and drive-up the commodity-linked ‘Loonie’.

The GBP/CAD exchange rate could continue to head higher this week, however, if the outlook for Britain’s economy remains largely optimistic.

As Covid-19 cases continue to fall and the UK’s vaccination programme steams ahead, we will likely see Sterling head higher.

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