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Pound Canadian Dollar (GBP/CAD) Exchange Rate Rises as Canada’s Covid-19 Situation Reaches ‘Critical’ Levels

April 26, 2021 - Written by John Cameron

GBP/CAD Exchange Rate Edges Higher as Canada Faces Critical Stage of Covid-19

The Pound Canadian Dollar (GBP/CAD) exchange rate rose today because of rising concerns over Canada’s Covid-19 resurgence. The pairing is currently trading around CA$1.73.

Canadian Prime Minister Justin Trudeau recently commented that Canada’s Covid-19 situation has become ‘critical’.

Canada’s Chief Public Health Officer Theresa Tam also commented:

‘Elevated case counts and severe illness trends remind us we are still in a right race between vaccines and variants and our actions matter.’

As a result, the Canadian Dollar to Pound exchange rate has suffered from fears that the nation could be facing another spik in Covid-19 cases.

The Bank of Canada (BoC) has also become more hawkish about the outlook for the Canadian economy.

Greg Taylor, a portfolio manager at Purpose Investments, commented:

‘The fact that the Bank of Canada is now starting to take the foot off the gas... it is the first sign of what's going to happen and be the big story for the second half of the year.’

Consequently, we could see the CAD/GBP exchange rate head higher if the outlook for Canada’s economy continues to improve.

Pound (GBP) Exchange Rate Rises as UK Optimism Returns

The Pound (GBP) rose today as UK Covid-19 cases and deaths remains relatively low, with bars, restaurants, and non-essential shops remaining open.

Jeremy Thomson-Cook, chief economist at international business payments firm Equals Money, commented on Britain’s economic situation:

‘The dichotomy of rising Covid-19 cases globally but a UK that is enjoying reopened bars, restaurants and shops should continue to work in the pound’s favour should the vaccination program continue to progress, the hospitalisation rate remain low and border controls stay in place to eliminate the risk of further outbreaks.’

As a result, Sterling has benefited from rising optimism in the nation’s ability to recover its economy to pre-pandemic levels by next 2022.

Growth next year is now predicted to reach its highest levels since the Second World War.

Ian Stewart, the chief economist at Deloitte, explains:

‘The UK is primed for a sharp snapback in consumer activity. High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months.’

Pound Canadian Dollar (GBP/CAD) Exchange Rate Forecast: Could a Hawkish BoC Boost the ‘Loonie’?

Canadian Dollar (CAD) investors will be awaiting Tuesday’s speech from the Bank of Canada’s (BoC) Senior Deputy Governor Tiff Macklem.

Any bullish comments about the Canadian economy would be CAD-positive.

The oil-sensitive ‘Loonie’ would also benefit from any indications that oil prices could head higher in the coming weeks or months.

The Pound Canadian Dollar (GBP/CAD) exchange rate could head higher this week if the outlook for the UK’s economy continues to improve.
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