Pound Canadian Dollar Exchange Rate News: GBP/CAD Stumbles Amid Strong Oil Prices

February 22, 2022 - Written by John Cameron

STORY LINK Pound Canadian Dollar Exchange Rate News: GBP/CAD Stumbles Amid Strong Oil Prices

GBP/CAD Trading Lower as Geopolitical Uncertainty Strengthens Oil Prices

The Pound Canadian Dollar (GBP/CAD) exchange rate is dropping today as the developing situation between Russian and Ukraine drives oil prices up, bolstering the ‘Loonie’.

At the time of writing, the GBP/CAD exchange rate is trading at approximately CA$1.7283, down roughly by 0.3% from today’s opening levels.

Canadian Dollar (CAD) Rises as Oil Prices Reach 7-Year-High

The Canadian Dollar (CAD) is gaining ground against the Pound (GBP) this morning as oil prices strengthen amid geopolitical uncertainty.

WTI crude has climbed to $95.50, up by 4.86%, trading at the highest levels since 2014 and bolstering the commodity-linked CAD.

The high oil prices are being driven by the situation in Ukraine after Vladimir Putin ordered Russian troops across the border to ‘maintain peace’. Analysts fear retaliatory sanctions from Western powers could include restricting Russian oil exports.

Victoria Scholar, head of investment at interactive investor, said:

‘The intensifying crisis between Russia and Ukraine has raised concerns about the supply disruptions that would ensue as sanctions look set to cripple Russia, the world’s second largest oil exporter and the world’s top natural gas producer.

‘If Putin continues his aggression and the threat of war becomes a reality, oil prices could easily push beyond $100 towards $120 a barrel to fresh highs not seen since 2014.

‘Not only are geopolitical tensions supporting the uptrend but the fundamentals of supercharged demand post COVID coupled by constrained supply from OPEC+ continue to support more bullish price action ahead.’

Pound (GBP) Falls as UK’s Monthly Budget Surplus Fails to Reach Forecast

The Pound (GBP) is dropping against the Canadian Dollar (CAD) as the UK’s reported a smaller-than-expected budget surplus at the start of 2022.

Rishi Sunak, the chancellor, said:

‘…our debt has increased substantially and there are further pressures on the public finances, including from rising inflation.

‘Keeping the public finances on a sustainable path is crucial so we can continue helping the British people when needed, without burdening future generations with high debt repayments.’

However, the UK’s public sector net borrowing for January has reported its first surplus since the pandemic began, limiting the Pound’s losses.

Meanwhile, Bank of England (BoE) policymaker, Dave Ramsden, delivered a speech this morning, in which he suggested that ‘In the near term, some further tightening seems likely to be needed’.

This is reinforcing expectations for a March rate hike from the BoE and helping to cap the Pound’s losses.

GBP/CAD Exchange Rate Forecast: BoE Speeches in Spotlight

Looking ahead, the GBP/CAD exchange rate may be influence by scheduled speeches from BoE Governor, Andrew Bailey, as well as policymakers, Silvana Tenreyro and Huw Pill.

Should the contents of these speeches set a broadly hawkish tone, it may further bolster expectations for a March rate hike and buoy Sterling.

Meanwhile, the Canadian Dollar is likely to continue to move in tandem with oil prices.

If the current Russia-Ukraine anxieties continue to build, and oil prices maintain their bullish momentum it is likely to support the commodity-linked ‘Loonie’.

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TAGS: Pound Canadian Dollar Forecasts