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Pound Canadian Dollar Exchange Rate News: GBP/CAD Slides to Fresh Two-Month Low amid UK Fuel Crisis

September 29, 2021 - Written by John Cameron

Pound (GBP) Slumps amidst UK Fuel Concerns

The Pound (GBP) remains on the back foot against the Canadian Dollar (CAD) and the majority of its other peers today, amidst ongoing concerns over the UK’s fuel shortage.

Up to 90% of petrol stations in the UK reported shortages earlier this week after a weekend of panic buying lead to massive queues at the pumps.

This panic was triggered by fears over a shortage, as the industry struggles to find enough qualified drivers for their tankers.

Whilst the government has claimed that the situation is ‘stabilising’ as panic buying recedes, there are concerns than consumers and businesses will face increased costs at the pump in the weeks to come.

Simon Williams, fuel spokesman at RAC, said:

‘We’re monitoring the situation closely but with some analysts predicting the price could hit 90 US Dollars before the end of the year as demand for oil surges as we come through the pandemic, there is a risk we could see the average price of unleaded fuel hit a new record of around 143p per litre.’

This would put even more pressure on business at a time when they are already under pressure from staff shortages and supply chain constraints.

The fuel shortages alongside the surge in energy prices in recent weeks has exacerbated concerns over the resilience of the UK’s economic recovery, with GBP investors becoming increasingly concerned that growth could stall in the last quarter of the year due to multiple hurdles facing businesses.

Canadian Dollar (CAD) Gains Tempered by Falling Oil Prices

At the same time, the appeal of the commodity-linked Canadian Dollar (CAD) has been undermined today, by a modest pullback in oil prices.

After climbing above $75 a barrel to a near three-year high on Tuesday, WTI crude prices have fallen around 1% so far today.

This drop comes as investors express concern over elevated coronavirus cases in many parts of the world as well as the potential for a sharp slowing of economic growth in China, both of which are giving rise to concerns that oil demand might not be as robust as previously expected in the coming months.

Oil prices have risen sharply over the past month as surging gas prices in Europe and other parts of the world has made oil more attractive as a fuel for power stations, ahead of what is forecast to be a cold winter.

As a major Canadian export, CAD exchange rate is often driven by fluctuations in oil prices.

GBP/CAD Exchange Rate Forecast:

Looking ahead, the UK’s ongoing economic woes could see the Pound to Canadian Dollar (GBP/CAD) exchange rate remain vulnerable to losses through the remainder of the week.

However, Sterling may be offered some respite later this afternoon, following a speech by Bank of England (BoE) Governor Andrew Bailey, should he reiterate the bank’s recent hawkish forward guidance and bolster expectations for a rate hike in early 2022.

Meanwhile, the focus for CAD investors in the second half of this week will be on the publication of Canada’s latest GDP figures.

July’s monthly reading is forecast to report a modest contraction of domestic growth, potentially weakening the Canadian Dollar towards the end of the session.
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