June 23, 2021 - Written by John Cameron
STORY LINK Pound Canadian Dollar Exchange Rate Steady as Canadian Retail Sales Fall in April
GBP/CAD Exchange Rate Rangebound, Could Rising Oil Prices Boost the ‘Loonie’?
The Pound Canadian Dollar exchange rate held steady today following the publication of Canada’s retail sales for April, which fell by a worse-than-expected -5.7%.
The Canadian Dollar (CAD) failed to rise against the Pound despite a number of supporting factors including rising oil prices and a overall positive outlook for the nation’s economy.
Analysts at Statistics Canada commented on the data:
‘Amid the ongoing COVID-19 pandemic in Canada, provincial governments continued to enact public health measures in several regions across the country, which directly affected the retail sector. In light of continuing restrictions, both retailers and consumers have adapted to these business conditions.’
The commodity-linked Canadian Dollar has, however, received a boost from rising demand for oil. WTI crude has sustained highs over $73 per barrel thanks to falling Covid-19 cases across Europe, the US and China.
Oil prices are expected to head higher over the course of the next few weeks thanks to intensive coronavirus vaccination efforts in key economies.
Slobodan Drvenica, an analyst for FX Street, explains:
‘Improved sentiment over the pace of global vaccination against coronavirus and expectations that demand would significantly rise on lifting restrictive measures and reopening economies, as well as the start of summer driving season in the northern hemisphere, contributed to oil prices rally which accelerated in the past three months.’
Could we see the CAD/GBP exchange rate head higher this week as oil prices creep higher?
Pound (GBP) Exchange Rate Rangebound Despite Strong UK PMI Data for June
The Pound (GBP) failed to make any notable gains against the ‘Loonie’ today following the publication of the latest flash UK services and manufacturing PMI data for June.
While the UK manufacturing PMI beat forecasts at 64.2, the UK’s services PMI dipped below forecasts from 62.9 to 61.7.
Nevertheless, the outlook for the UK economy remains on the whole optimistic, thanks to the low levels of Covid-19 deaths and relatively steady hospitalisations.
Duncan Brock, the group director at CIPS, commented on the latest PMI data:
‘The month of June offered abundance in terms of rapid growth and new orders along with the highest levels of job creation since 1998 in private sector business. The lockdown lid was lifted on depressed sales and marketplaces buzzed with activity and optimism.’
This week also saw Prime Minister Boris Johnson say that it was ‘looking good’ for the end of lockdown restrictions on 19 July.
Health Secretary Matt Hancock also appeared to agree, saying that data was looking promising for the final – and irreversible lifting – of lockdown restrictions next month.
As a result, we could see the Pound (GBP) head higher this week if confidence in the lifting of lockdown measures next month uplifts the outlook for the nation’s economic recovery.
GBP/CAD Exchange Rate Forecast: Could Rising Oil Prices Boost the Canadian Dollar?
Pound (GBP) investors will monitor tomorrow’s interest rate decision from the Bank of England (BoE).
While the BoE is largely expected to hold interest rates at 0.1%, any upbeat comments about the outlook for the nation’s economy this year would be Pound-positive.
Friday will see the release of the latest UK consumer confidence gauge for June. Any improvement in consumer morale would boost the GBP/CAD exchange rate.
We could see the CAD/GBP exchange rate edge higher this week, however, if oil prices continue to rise, buoying demand for the commodity-linked Canadian Dollar.
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts