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GBP/CAD Exchange Rate Steady as Doctors Warn of ‘Devastating Consequences’ as UK is Set to Ease Lockdown Measures

July 13, 2021 - Written by John Cameron

GBP/CAD Exchange Rate Rangebound as UK Faces Division Over Easing of Lockdown Restrictions

The Pound Canadian Dollar (GBP/CAD) exchange rate held steady today after several senior doctors warning Prime Minister Boris Johnson of ‘potentially devastating consequences’ from the lifting of lockdown restrictions in England on July 19. The pairing is currently trading around CA$1.72.

Dr Chaand Nagpaul, the council chair at the British Medical Association (BMA), commented:

‘It’s irresponsible – and frankly perilous – that the government has decided to press ahead with plans to lift the remaining Covid-19 restrictions on 19 July.

‘The BMA has repeatedly warned of the rapidly rising infection rate and the crippling impact that Covid-related hospitalisations continue to have on the NHS, not only pushing staff to the brink of collapse but also driving up already lengthy waiting times for elective care.’

In UK economic data, today saw the release of June’s BRC like-for-like retail sales report, which rose by 6.7% but was below forecasts of a 24% increase.

Helen Dickinson, the chief executive of the BRC, commented:

‘The second quarter of 2021 saw exceptional growth as the gradual unlocking of the UK economy encouraged a release of pent-up demand built up over previous lockdowns.’

As a result, we could see the Pound Canadian Dollar exchange rate head higher this week as confidence in the UK economy grows ahead of the lifting of restrictions next week.

CAD Exchange Rate Steady as Lingering Oil Price Concerns Weigh on ‘Loonie’

The Canadian Dollar firmed today as oil-prices have begun to make some modest gains. As a result, the oil-sensitive ‘Loonie’ has benefited from a return of stability to WTI crude prices.

Stephen Brennock of oil broker PVM however noted a generally dovish tone to oil markets:

‘The market has been a bit negative as of late amid the growing sense that the latest OPEC+ impasse could be a precursor to a pump-and-grab scenario, meaning a lot more oil potentially gets put on the market.’

If oil prices show signs of slipping on fears over the spread of the Delta coronavirus, then we could see the CAD/GBP exchange rate head higher.

John Kilduff, a partner at Again Capital LLC, commented:

‘As the Covid-19 variant continues to hit Asia hard, which is really the key swing demand center, that’s a big, big negative for the complex.’

Hans van Cleef, senior energy economist at ABN Amro also said:

‘There is some weaker Chinese data, but also the rise of the delta variant in Europe is causing some doubts on the demand recovery.’

As a result, some CAD investors have become cautious about a possible dip in oil demand weighing on the commodity-correlated ‘Loonie’.

GBP/CAD Exchange Rate Forecast: UK Inflation Data in Focus

Pound (GBP) investors are awaiting tomorrow’s release of the latest consumer price index for June.

Could an improvement in the outlook for the British economy boost the Pound Canadian Dollar exchange rate?

UK Covid-19 developments will also continue to drive the GBP/CAD exchange rate this week.

If Downing Street appears increasingly confident about lifting lockdown measures next week, then we could see Sterling head higher on renewed confidence in the UK’s economic recovery.

CAD traders will be eyeing tomorrow’s interest rate statement from the Bank of Canada (BoC). Could a dovish message from Canada’s central bank drag down the ‘Loonie’?

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