July 5, 2021 - Written by John Cameron
STORY LINK Pound Canadian Dollar Exchange Rate Steady Ahead of Downing Street’s Update on Lifting Lockdown Measures
GBP/CAD Exchange Rate Rangebound, UK PM is Expected to Affirm Easing of Lockdown Restrictions This Month
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady ahead of Prime Minister Boris Johnson’s announcement later today. But could the PM’s conformation of lifting lockdown restrictions on July 19 boost Sterling? The pairing is trading around CA$1.70 at the time of writing.
Boris Johnson is expected confirm the easing of lockdown restrictions later this month despite rising daily case of Covid-19.
The new health secretary, Sajid Javid, also said that it was impossible to completely eradicate the virus saying that he country would have to ‘find ways to cope with it’.
Stephen Reicher, a professor at the University of St Andrews, has however criticised the Javid, saying:
‘It is frightening to have a ‘health’ secretary who still thinks Covid is flu. Who is unconcerned at levels of infection. Who doesn’t realise that those who do best for health also do best for the economy. Who wants to ditch all protections while only half of us are vaccinated.’
However, the Pound has benefited from growing confidence in the economy, with hopes that the lifting of restrictions could further speed up the nation’s economic recovery going forward.
In UK economic news, today saw the release of the latest services PMI figure for June, which beat forecasts and rose to 62.4.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, commented on the statistic:
‘The services sector continued to expand at record-level rates as marketplaces opened up and consumers returned to hospitality with a fourth sharp monthly rise in new business and the highest job creation levels for seven years.’
Canadian Dollar (CAD) Exchange Rate Steady as Oil Prices Stall
The Canadian Dollar (CAD) held steady today as the commodity-linked ‘Loonie’ failed to secure any further gains from oil prices. Last week saw oil prices climb but this week saw the WTI crude price hold firm at around $74 per barrel.
Canada’s latest balance of trade report also revealed that Canada’s trade report entered a deficit at CA$1.39 billion in May instead of a forecast surplus.
Analysts at the National Bank of Canada said:
‘Imports should continue to be strong thanks to demand stemming from nationwide reopening and one of the best vaccination campaigns in the world. Though, exports should also pick up again as production capacity increases and global demand returns thanks to improving sanitary situations, we expect the trade balance to remain in deficit in the coming months.’
In Canadian economic data, later this afternoon will see the publication of the Bank of Canada’s (BoC) latest business outlook survey.
Any improvement in Canadian business morale would see the GBP/CAD exchange rate begin to pick-up.
Conversely, if business morale sours, then we would see the Canadian Dollar to Pound exchange rate fall.
GBP/CAD Exchange Rate Outlook: Could Rising Oil Prices Uplift the Canadian Dollar?
Pound traders will eye tomorrow’s publication of June’s UK construction PMI. Any improvement in the sector would see Sterling head higher.
Added to this, Downing Street’s renewed commitment to easing lockdown measures this month will likely see the GBP/CAD exchange rate head higher on growing confidence in the nation’s economic recovery.
Oil prices will drive the commodity-linked ‘Loonie’ this week. Could rising demand for oil see prices head higher along with the CAD/GBP exchange rate?
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts