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Pound Canadian Dollar (GBP/CAD) Exchange Rate Edges Higher Despite Rising Oil Prices

June 21, 2021 - Written by John Cameron

GBP/CAD Exchange Rate Rises, Demand for Oil Steadily Increases

The Pound Canadian Dollar (GBP/CAD) exchange rate rose today, with the ‘Loonie’ subdued despite rising WIT crude prices. The pairing is currently fluctuating around CA$1.72.

The commodity-linked Canadian Dollar failed to rise against the Pound today despite an uptick in crude oil prices, thanks to growing optimism in key economies like the Europe’s Eurozone and the United States.

Margaret Yang, a strategist at Daily FX, commented on oil prices, which are expected to continue to rise in coming weeks:

‘The outlook for energy demand remains robust as the economic recovery gains momentum in the US and Europe, although parts of Asia are still suffering from Covid-19 outbreaks. US daily air travellers surpassed 2 million for the last two weeks, underscoring strong demand for fuel. The recent fall in US commercial crude inventories also strengthened this prospect.’

However, this has failed to buoy the CAD/GBP exchange rate, with ‘Loonie’ investors becoming more cautious about the outlook for the global economy.

Today also saw a lack of any notable Canadian economic data, which has left Canadian markets in wait-and-see mode.

Rising oil prices could, however, see the CAD/GBP exchange rate begin to creep higher later in today’s session.

Pound (GBP) Exchange Rate Rises as the UK Economy is on a ‘Sounder Footing’

The Pound (GBP) rose today after Prime Minister Boris Johnson said it was ‘looking good’ that England would lift restrictions on 19 July.

Boris Johnson said that England is on course to lifting all the remaining Covid-19 restrictions later next month. He said:

‘You can never exclude that there will be some new disease, some new horror that we simply haven’t budgeted for, or accounted for.

‘But looking at where we are, looking at the efficacy of the vaccines against all variants that we can currently see – so Alpha, Delta, the lot of them, Kappa – I think it’s looking good for July 19 to be that terminus point.’

As a result, GBP investors have become more confident about the outlook for the UK economy, despite concerns of a challenging autumn and winter, when Covid-19 infections are predicted to rise.

Today saw reports that May’s economic recovery in tourism and hospitality had accelerated thanks to the easing of lockdown restrictions last month.

Jeavon Lolay, the head of economics at Lloyds Bank, commented:

‘Whether the four-week delay to further easing of restrictions will impact this trend is unclear. But while the delay is understandably disappointing for many businesses, there’s no denying that the economy is now on a much sounder footing.’

GBP/CAD Exchange Rate Forecast: Could Rising Oil Prices Boost the Canadian Dollar?
Canadian Dollar (CAD) investors will be looking ahead to Wednesday’s publication of the Canadian retail sales data for April.

Any signs of an improvement in Canada’s retail sector would boost the CAD/GBP exchange rate.

However, the Canadian Dollar will remain sensitive oil prices this week, with any signs of rising prices being CAD-positive.

Pound traders will continue to monitor the UK’s Covid-19 situation this week.

If Covid-19 infection rates continue to climb, then we would see Sterling suffer due to rising concerns over a possible third-wave of the virus later this year.

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