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Pound Canadian Dollar Exchange Rate News: GBP/CAD Climbs as UK Economy Grows Faster-Than-Expected

March 31, 2022 - Written by John Cameron

GBP/CAD Boosted as UK Economy Grew Faster-Than-Predicted

The Pound Canadian Dollar (GBP/CAD) exchange rate is trading higher this morning after data revealed the UK economy grew at a faster-than-expected pace in the last quarter of 2021.

At the time of writing, the GBP/CAD exchange rate is trading at approximately CA$1.6435, roughly up 0.2% from today’s opening levels.

Pound (GBP) Buoyed by Better-Than-Forecast GDP Reading

The Pound (GBP) is gaining ground against the majority of its peers this morning following a strong GDP reading.

This morning it was revealed the UK economy grew at a faster pace in the last quarter of 2021 than initially thought.

The final estimate for fourth quarter was expected to confirm a 1% expansion, up from a downward revised 0.9% in the third quarter.

Instead, growth was revised up to 1.3% boosted Sterling’s appeal.

According to the Office of National Statistics (ONS), a rise in GP visits and coronavirus-related activities increased demand in human health and social work sectors, becoming the largest contributors to UK’s economic expansion.

The UK’s GDP is only 0.1% below pre-pandemic levels and overall, the economy expanded 7.4% throughout 2021.

However, some analysts expressed some concern over the downwards revision to consumer spending.

Paul Dales, senior UK economist at Capital Economics, said:

‘The upward revision to GDP growth in Q4 of last year may not be as encouraging as it looks as a lot of it appears to be due to inventories while consumer spending was revised down.

‘The latter suggests the squeeze on real incomes is starting to bite, although the fall in the saving rate is providing a cushion.’

Meanwhile, optimism over Ukraine-Russia peace talks continue to lend support to GBP exchange rates.

Canadian Dollar (CAD) Stumbles as Oil Prices Decline

The commodity-linked Canadian Dollar (CAD) is trading lower against the Pound (GBP) this morning as oil prices slipped by approximately $5 per barrel.

At present, crude oil is trading at $102.83 per barrel, down by 4.63%, and Brent is trading at $108.81, down 4.10%.

The latest slide comes as the US is considering releasing oil reserves onto the market, with plans to add approximately 180 million barrels to the market to help push crude prices down.

Russia’s invasion of Ukraine caused oil prices to surge as high as $139 a barrel earlier this month.

But as negotiations between the two countries begin to make headway, prices have begun to cool, weakening the oil-sensitive ‘Loonie’ in the process.

GBP/CAD Exchange Rate Forecast: Will Peace Talks Continue to Buoy Sterling?

Looking ahead, peace talks between Russia and Ukraine will likely remain the key driving force behind the Pound Canadian Dollar exchange rate.

If negotiations continue to show progress, it is likely to bolster the risk-sensitive GBP.

Meanwhile, the ‘Loonie’ may be supported by Canada’s GDP reading for January later this afternoon, with the data forecast to show a 0.2% expansion in the Canadian economy.

Furthermore, the commodity-linked Canadian Dollar will remain susceptible to oil price dynamics.

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