Pound Canadian Dollar Exchange Rate News: GBP/CAD Rangebound as Oil Prices Slide

June 9, 2022 - Written by John Cameron

STORY LINK Pound Canadian Dollar Exchange Rate News: GBP/CAD Rangebound as Oil Prices Slide

GBP/CAD Muted as Shanghai Returns to Lockdown

The Pound Canadian Dollar (GBP/CAD) exchange rate is trading in a narrow range this morning amid the threat of fresh lockdowns in Shanghai, weighing on oil prices. Meanwhile, the Pound (GBP) is subdued amid UK political uncertainty.

At the time of writing, the GBP/CAD exchange rate is trading at approximately CA$1.57, virtually unchanged from this morning’s opening levels.

Canadian Dollar (CAD) Rangebound as Oil Prices Slip

The commodity-linked Canadian Dollar (CAD) is trading in a narrow range against the Pound today as oil prices decline.

At present, WTI oil is trading at CA$121.40 per barrel, down by 0.6%, and Brent is trading at CA$122.97, down by 0.45%.

This comes as Shanghai – China’s largest cargo depot – locks down 2.7 million people to conduct mass coronavirus testing. This is in accordance with Beijing’s ‘zero-Covid’ policy to ensure another outbreak doesn’t occur.

Chinese authorities have stated ‘the closure will be lifted after samples have been collected’, however it is unclear if the restrictions could be expanded to more of the city and for how long they may remain in place if cases are found to exceed limits.

A total of nine Covid infections have been reported in the city today.

Manufacturing and trade is likely to weaken if China reimposes lockdowns in Shanghai or other major cities. This is weighing on global oil demand expectations and limited demand for the ‘Loonie’ this morning.

Pound (GBP) Subdued amid UK Political Anxiety

The Pound is flat against the Canadian Dollar today as UK political turbulence continues.

On Monday, Prime Minister Boris Johnson narrowly escaped being ousted after Conservative MP’s voted for him to remain, 211 to 148.

Although Johnson’s narrow victory should allow him to maintain his premiership for another 12 months, rebel Tory MP’s are threatening to alter the 1922 committee rules. This would enable another vote of no confidence to be held later in the year.

In a bid to reassert his position, experts believe Johnson may take a hardline approach with regards to Brexit. In recent weeks, Johnson and other government officials have reportedly been looking to make unilateral amendments to the Northern Ireland protocol.

If the UK government does make unilateral amendments to the protocol without the EU’s consent, it may trigger a UK-EU trade war.

A UK official stated:

‘The aim is to fix the problems and provide businesses and communities with certainty.

‘Obviously we’d still — and always will — prefer to do that with the EU, but in any case the quicker we can restore the balance in the Belfast / Good Friday Agreement the better. Everyone should be able to agree with that aim.’

Further undermining GBP exchange rates are concerns over the UK economy, following warnings from the OCED and the British Chamber of Commerce that growth is likely to grind to a halt over the next couple of years.

GBP/CAD Exchange Rate Forecast: Will Canada’s Unemployment Rate Boost CAD?

Looking ahead, the Pound Canadian Dollar exchange rate may be pressured by the publication of Canada’s latest unemployment figures.

In May, Canada’s unemployment rate is expected to remain at a record low, likely buoying CAD exchange rates.

Later today, the Canadian Dollar may also be influenced by speeches from Bank of Canada (BoC) Governor, Tiff Macklem, and Deputy Governor, Carolyn Rogers.

Will a hawkish tone boost BoC interest rate hike bets?

Meanwhile, due to an absence of UK economic data, the Pound is likely to remain sensitive to UK politics.

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