August 26, 2021 - Written by John Cameron
STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Dips as UK Labour Shortage Weakens Sterling
GBP/CAD Exchange Rate Falls, UK Car Manufacturing Falls to a 65-Year Low
The Pound Canadian Dollar (GBP/CAD) exchange rate dipped today as fears over a UK labour shortage for consumer-facing firms has dented confidence in the nation’s economic recovery. The pairing is currently trading around CA$1.73.
Charlotte Dendy, CBI Principal Economist, explains:
‘It’s clear that the service sector has performed well over the three months to August, revealing strong volumes and profits growth in our latest survey as the economy reopened over the summer. However, the outlook between sub-sectors is set to diverge over the quarter ahead, with a deterioration in prospects expected in consumer services.’
Consequently, Pound investors have become increasingly concerned about the outlook for the British economy. More so now that Covid-19 infection rates and hospitalisations are steadily increasingly week-on-week.
UK car manufacturing has also collapsed to a 65-year low due to a global shortage of microchips, the ‘pingdemic’ and summer holiday shutdowns.
In absence of any notable UK economic data today, however, GBP traders are remaining notably cautious.
Canadian Dollar (CAD) Exchange Rate Steady Despite Falling Oil Prices
The Canadian Dollar (CAD) failed to make significant gains against the Pound, however, as oil prices continue to dip, limiting the appeal of the oil-sensitive ‘Loonie’.
Covid-19 concerns have limited oil prices and have stalled the recent rally in demand for oil.
Capital Economics commented in a note:
‘For now, US consumers appear to be shrugging off the spread of the Delta variant ... However, it seems likely that we are near the peak in US demand, which will act as a lid on oil prices.’
Ehsan Khoman, director at MUFG Bank, also said:
‘Push-and-pull factors have led oil prices to gyrate wildly in recent weeks. Looking ahead, the balancing of cyclical demand headwinds with structural supply tailwinds, leads us to remain neutral-to-bearish on oil prices for the rest of 2021.’
In the absence of Canadian economic data today, the CAD/GBP exchange rate has remained relatively steady, with ‘Loonie’ traders instead monitoring the global economic situation.
With uncertainty still present over the Delta variant of the coronavirus – and rising daily cases in key economies such as the UK and China – CAD traders are remaining cautious.
GBP/CAD Exchange Rate Forecast: Could Falling Oil Prices Drag Down the ‘Loonie’?
The Canadian Dollar (CAD) will remain sensitive to fluctuating oil prices this week. Could oil prices continue to fall, dragging demand for the commodity-correlated ‘Loonie’?
Due to a lack of Canadian or UK economic data for the rest of this week, however, we could see the Pound Canadian Dollar exchange rate stabilise.
However, if Covid-19 infections rise in the UK, then we could see the Pound fall against the Canadian Dollar.
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts