Pound Canadian Dollar Exchange Rate Rises as UK Takes Big Step in Cautious Easing Lockdown Restrictions

March 29, 2021 - Written by John Cameron

STORY LINK Pound Canadian Dollar Exchange Rate Rises as UK Takes Big Step in Cautious Easing Lockdown Restrictions

GBP/CAD Exchange Rate as UK allows Outdoor Group Socialising

The Pound Canadian Dollar exchange rate rose by 0.4% today as the UK takes a big step in a cautious easing of lockdown restrictions. The pairing is currently fluctuating around CA$1.74.

Outdoor group socialising is now legal in the UK, buoying UK market confidence as the nation takes steps towards reopening its economy.

Prime Minister Boris Johnson urged caution, however, saying:

‘We must remain cautious, with cases rising across Europe and new variants threatening our vaccine rollout. Despite today’s easements, everyone must continue to stick to the rules.’

Nonetheless, falling UK Covid-19 infections and hospitalisations have buoyed confidence in the UK economy, which is set to steadily reopen over the course of the next few months.

In UK economic data, today saw the release of the latest mortgage approval figure for February, which fell from 97,000 in January to 87,000 last month.

Howard Archer, the Chief Economic Advisor to EY Item Club, commented on the report:

‘Bank of England reported mortgage approvals for house purchases dipped for 3rd month running in February and at [an] increased rate to 6-month low of 87,669 (97,350 in January & more than 13-year high of 103,708 in November). Feb level still 6th highest level since September 2007.’

Falling mortgage approvals have failed to dampen UK market mood, however, with investors largely expecting approvals to head higher in March and April, when lockdowns have begun to ease.

Canadian Dollar (CAD) Falls Despite Rebounding Oil Prices

The Canadian Dollar (CAD) failed to rise against the Pound today despite WTI oil prices rebounding about $60 and driving demand for the oil-sensitive ‘Loonie’.

However, growing concerns over Europe’s third-wave of Covid-19 infections have dampened global market mood, leaving some CAD investors feeling more cautious.

Mikal Skuterud, an economics professor at the University of Waterloo, commented on the state of the Canadian economy:

‘It’s really hard to understand what’s going on.’

‘We saw some (economic recovery) in February. I expect almost certainly we’re going to see some of that improvement in March. But it’s slow. We’re still a long way off.’

As a result, Canadian Dollar (CAD) traders are becoming largely cautious as the outlook for Canada’s economy looks increasingly uncertain as the Covid-19 pandemic unfolds.

The International Monetary Fund (IMF), however, has expressed confidence in Canada’s economic rebound in the months ahead.

GBP/CAD Exchange Rate Forecast: Could Rising Oil Prices Boost the Canadian Dollar This Week?

Canadian Dollar (CAD) traders will be looking ahead to Wednesday’s publication of the latest Canadian Gross Domestic Production figure for January.

Any marked improvement in Canada’s growth at the beginning of this year would be CAD-positive.

Oil prices will continue to drive the Canadian Dollar Pound (CAD/GBP) exchange rate, however, with any signs of rising prices driving-up the oil-sensitive ‘Loonie’.

The Pound Canadian Dollar could head higher this week, however, if the outlook for the UK economy continues to improve as lockdown restrictions are cautiously eased.

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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts