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Pound Canadian Dollar Exchange Rate News: GBP/CAD Rises amid Improved Risk Appetite

April 27, 2022 - Written by John Cameron

GBP/CAD Climbs as Risk Appetite Returns

The Pound Canadian Dollar (GBP/CAD) exchange rate is trading higher this morning amid an improvement in market risk appetite.

At the time of writing, the GBP/CAD exchange rate is trading at approximately CA$1.6154, up roughly 0.3% from today’s opening levels.

Pound (GBP) Bolstered on improved Risk Appetite

The Pound (GBP) is rising against the Canadian Dollar (CAD) this morning amid improving risk appetite.

Moreover, GBP investors are purchasing the dip following a sharp slump in Sterling over the past week.

In spite of this, demand for the Pound is limited as investors look toward next week’s interest rate decision.

Bank of England (BoE) policymakers have largely struck a dovish tone in recent weeks. Combined with weak consumer spending, this is dampening interest rate hike bets.

In addition, UK political uncertainty is also capping GBP’s gains today.

Boris Johnson was fined earlier this month for breaking lockdown rules in 2020.

In turn, MP’s – both Conservative and the opposition – have called for an investigation by the Privilege Committee into whether Johnson knowingly misled parliament having repeatedly stated ‘no rules were broken’.

If Johnson is found guilty of such, he will be expected to resign in accordance with the ministerial code.

Moreover, the Confederation of British Industry’s (CBI) distributive trade index printed well below expectations in April as the UK’s cost of living crisis drove a sharp fall in consumer spending.

Martin Sartorius, principal economist at the CBI, said: 

‘Retail sales were below seasonal norms in April as consumer spending continued to shift back towards services and rising prices impacted households’ spending power.

‘Rapid inflation means that the cost-of-living crisis is going nowhere soon. To combat these challenges, the government will need to keep a close eye on support for vulnerable households and businesses struggling with higher energy prices.

‘Meanwhile, going for growth must continue to be the government’s primary domestic focus, as increasing productivity growth is the only sustainable route to raise living standards.’

Canadian Dollar (CAD) Despite Strong Oil Prices

The commodity-linked Canadian Dollar (CAD) is slipping against the Pound (GBP) in spite of strong oil prices.

At present, WTI crude is trading at $102.19 per barrel, up by 0.5%, and Brent is trading at $105.45, up by 0.5%.

CAD investors remain cautious of the oil market however as China’s ‘zero Covid’ policy could result in a sharp drop in global demand.

Moreover, the ‘Loonie’ is subdued ahead of a speech from Bank of Canada (BoC) Governor Tiff Macklem.

Should Macklem strike a hawkish tone and reinforce expectations for additional monetary tightening from the BoC, CAD exchange rates could strengthen.

GBP/CAD Exchange Rate Forecast: Will BoE Governor Strike a Dovish Tone?

Looking ahead, the Pound Canadian Dollar exchange rate may be influenced by a speech from Bank of England (BoE) Governor Andrew Bailey.

Should Bailey echo a dovish tone struck by some of his colleagues in recent weeks, it may dent interest rate hike bets and weaken demand for Sterling.

On the other hand, the ‘Loonie’ may be supported by the latest Canadian GDP reading. February’s GDP figures are expected to report growth accelerated from 0.2% to 0.8%.

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