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Pound Canadian Dollar Exchange Rate Falls amid Global Recession Fears

July 15, 2022 - Written by John Cameron

Pound Canadian Dollar (GBP/CAD) Exchange Rate Slides on Oil Recovery

The Pound Canadian Dollar (GBP/CAD) exchange rate is slipping today. A risk-off market mood is weighing on the exchange rate today amid global recession fears. A lack of significant data for the Pound (GBP) could also be limiting any gains for the pair. Additionally, a mild recovery in crude oil prices could be causing deeper losses.

At time of writing the GBP/CAD exchange rate is at around $1.5478, which is down roughly -0.3% from this morning’s opening figures.

Pound (GBP) Drops amid Risk-Off Mood

The Pound (GBP) is slipping against its competitors today. A retreat to global risk appetite could be harming the currency’s fortunes today, with a lack of significant data leaving it at the whims of market sentiment.

The impact of further travel disruption and industrial action may also be weighing on the Pound today. Train drivers’ unions RMT and Aslef both announced this week that they would be carrying out a two-day strike in August amid disputes over working conditions and pay.

Ongoing political uncertainty could also be jeopardising gains for Sterling. The leadership contest to replace Boris Johnson is expected to continue until early September. A second round of voting on Thursday narrowed the field to five candidates.

Brexit-related headwinds could also hamper the Pound’s gains. Investors remain concerned at the prospect of a UK-EU trade war.

The currency could be underpinned by the possibility of hawkish action from the Bank of England (BoE), however. The UK’s rate of inflation is forecast to climb even higher next week which could push the central bank into hiking interest rakes more aggressively than expected.

Canadian Dollar (CAD) Ticks Higher as Oil Supplies Tightens

The Canadian Dollar (CAD) is trending higher against its rivals today. A recovery in crude oil prices is likely helping to fuel gains for the commodity-tied ‘Loonie’. Oil prices have been bolstered by news that demand is likely to remain tight after having fallen below $100 a barrel earlier in the week.

In a report to Reuters, US officials stated that a boost in oil output from Saudi Arabia was not imminently expected.

Signals that the US Federal Reserve may not go ahead with a 1% interest rate hike also helped to stabilise oil prices. On the other hand, a poor outlook for the Chinese economy may limit the commodity’s upward momentum.

A risk-off market could be capping gains for the Canadian Dollar today, however. Global recession fears have seen investors look to safe-haven currencies this week.

GBP/CAD Exchange Rate Forecast: Will Climb to UK Inflation Force BoE to Act?

Looking ahead to next week for the Pound, May’s unemployment figures are forecast to remain at 3.8% after slipping in April. Signs of a cooling labour market could see GBP slip if investors pare back bets on BoE action.

On the other hand, inflation figures on Wednesday could push Sterling high if they climb to fresh highs as predicted. June’s rate of inflation is currently forecast to hit 9.3% up from 9.1% in May. The figures could place pressure on the BoE to hike interest rates to combat soaring inflation.

Friday’s predicted drop to June’s retail sales could also push the Pound lower if they print as forecast. The data’s impact could be limited however, as markets may have already priced in the Jubilee prompted dip to sales.

For the Canadian Dollar, the BoC’s senior loan officer survey could prompt some movement in CAD if investors pick up on any hints regarding future rate hikes.

On Wednesday, a forecast rise to June’s rate of inflation could push CAD higher if it increases expectations another bumper rate hike from the BoC.

Friday’s predicted boost to May’s retail sales could also see the Canadian Dollar climb if the figures print as forecast.

Finally, any further fluctuations in the price of crude oil are likely to prompt swings in the commodity-tied ‘Loonie’.

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