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Pound Canadian Dollar Exchange Rate News: GBP/CAD Rangebound as Ukraine Crisis Continues

March 9, 2022 - Written by John Cameron

GBP/CAD Muted as Russia-Ukraine War Battles On

The Pound Canadian Dollar (GBP/CAD) exchange rate is mixed today, in the wake of UK government announcement of additional sanctions against Russia.

At the time of writing, the GBP/CAD exchange rate is trading at approximately CA$1.6887, with minimal market movement from today’s opening levels.

Pound (GBP) Subdued as UK Aims to Phase Out Russian Oil

The Pound (GBP) is muted against the Canadian Dollar (CAD) as the UK government unveils additional sanctions against Russia.

Yesterday, the UK revealed plans to phase out reliance on Russian oil and gas.

Although the UK is not dependent on Russian imports, the situation may exacerbate the current cost-of-living crisis.

RAC's fuel spokesman Simon Williamson said:

‘It's not just about what consumers pay at the pump. Everything in our shops has ultimately been moved by a diesel powered lorry and businesses are obviously likely to pass on these costs.’

This is placing additional pressure onto an already-weak Pound.

Moreover, Russian planes are no longer permitted access into UK airspace.

Any Russian aircraft found to be in breach of these new laws will be detained by the UK government, with one Russian-linked plane already grounded in Farnborough.

Vladimir Putin has warned the West that Russia is looking to retaliate against all imposed sanctions.

Dmitry Birichevsky, Russia’s Director of the Foreign Ministry's department for economic cooperation, has stated that ‘Russia's reaction will be swift, thoughtful and sensitive for those it addresses.’

The ambiguity surrounding Russia’s potential response is leaving the Pound weak against the majority of its peers today.

An absence of UK data today is also leaving GBP susceptible to market sentiment.

Canadian Dollar (CAD) Mixed as Oil Prices Slip from 14-Yeah High

The commodity-linked Canadian Dollar (CAD) is trading in a narrow range against the Pound (GBP) this morning as oil prices slip.

At present, Crude oil WTI is trading at $121.90 per barrel, down by 1.45%, and Brent Crude Oil is trading at $126.56, down by 1.12%.

Yesterday, UBS commodity analyst Giovanni Staunovo said:

‘We consider $125 per barrel, our near-term forecast for Brent crude oil, as a soft cap for prices, although prices could rise even higher should disruptions worsen or continue for a longer period.’

However, during yesterday’s reports of the US, UK and EU banning Russian oil imports, many investors ‘bought the rumour’ boosting oil prices higher than these predictions and led to oil prices soaring to a 14-year high.

The US has since revealed a ban on all Russian oil and gas imports, whilst the UK and EU have announced plans to phase out the commodities.

Moreover, an absence of Canadian data today is leaving CAD susceptible to market sentiment and oil prices.

GBP/CAD Exchange Rate Forecast: Russia-Ukraine War to Remain at Forefront of Attention

The Ukraine crisis will continue dominating headlines for the foreseeable future, and will govern the Pound Canadian Dollar exchange rate in the near-term.

Should Russia retaliate against the sanctions imposed by the West, as threatened, it may drive global prices higher and add pressure to the UK’s cost of living crisis. In turn, this will weigh on demand for the Pound.

On the data front, Sterling may be bolstered by the UK’s GDP for January, if the market forecast of 0.2% - up from December’s 0.2% contraction – prints true.

On the other hand, the Canadian Dollar may be bolstered by February’s unemployment figures which is expected to report the jobless rate fell from 6.5% to 6.2%.

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