February 14, 2022 - Written by John Cameron
STORY LINK Pound Canadian Dollar Exchange Rate News: GBP/CAD Rangebound as Geopolitical Tensions Rise
GBP/CAD Trading Flat as Russia-Ukraine Issues Mount
The Pound Canadian Dollar (GBP/CAD) exchange rate is trading in a narrow range today as geopolitical concerns rise.
At the time of writing, the GBP/CAD exchange rate is trading at approximately CA$1.7250, with minimal market movement from today’s opening levels.
Canadian Dollar (CAD) Directionless Despite Oil Prices Reaching 7-Year High
The Canadian Dollar (CAD) is mixed against the Pound (GBP) this morning in spite of strong oil prices following a rise in geopolitical concerns.
In response to US President, Joe Biden’s, warning of a ‘very distinct possibility’ that Russia will soon invade Ukraine, investors across the globe are being cautious.
However, invasion fears are strengthening oil prices amid higher demand; this is supporting the commodity-linked ‘Loonie’.
For the first time since 2014, Brent crude oil prices reached $96 per barrel. At the time of writing, Crude oil was $93.09 per barrel.
IG Analyst, Kyle Rodda, said:
‘Markets are preparing for the risk of war in Europe, and it’s adding to the complex of issues driving uncertainty and volatility in global markets currently.
‘US reports on Friday suggested an invasion by Russian into Ukraine could come as soon as this week – earlier than expected…
‘From a humanitarian point of view, international relations pundits suggest this could be catastrophic.
‘For the markets, the concern is about the impact such a conflict will have on fragile energy markets, Europeans economic growth, and the broader financial system if sanctions are slapped on Russia.’
Pound (GBP) Mixed amid Rising Geopolitical Tensions
The Pound (GBP) is rangebound against the Canadian Dollar (CAD) this morning as Russia-Ukraine tensions mount.
Boris Johnson stated that there is a ‘window of opportunity’ to avoid global conflicts, and urged Vladirmir Putin to reconsider his actions and to ‘step back from the brink’.
However, the chairman of the Defence Select Committee, Tobia Elwood, said:
‘Putin is aligning Russia towards China. So, any sanctions that we threaten absolutely plays into his own strategy.
‘That's my point. We don't have a strategy and the final one has to do with dialogue. You know, Putin naturally craves the international spotlight and we're actually running around him and he's enjoying this.
‘We have no leverage, we have no collective effort. There's no coordination between what the West is actually doing.’
Furthermore, ongoing Brexit issues are also weighing on the Pound’s potential.
At present, the Northern Ireland protocol remains a source of anxiety as the future of the UK-EU relationship remains fraught.
On the other hand, the Bank of England’s hawkish outlook on monetary policy last week is buoying GBP appeal amid rate hike speculation.
GBP/CAD Exchange Rate Forecast: Will UK Average Earnings Place Pressure on GBP?
Tomorrow, the UK’s average earnings figures for December may weigh on the Pound Canadian Dollar (GBP/CAD) exchange rate.
Wage growth is forecast to slip from 4.2% to 3.9%, which may give rise to fresh concerns over the UK’s cost-of-living crisis.
Meanwhile accompanying data is expected to show UK unemployment to remain unchanged at 4.1% over the same period.
Later in the week, CAD may be buoyed as domestic inflation is forecast to remain unchanged at 4.8% in January.
The ‘Loonie’ may be further influenced by a speech from the Bank of Canada’s (BoC) Governor, Timothy Lane, scheduled for Wednesday.
Both GBP and CAD may also be impacted by the ongoing geopolitical tensions surrounding Russian action.
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TAGS: Pound Canadian Dollar Forecasts