Pound Canadian Dollar (GBP/CAD) Exchange Rate Sinks as Rising Oil Prices Boost the ‘Loonie’

February 17, 2020 - Written by John Cameron

STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Sinks as Rising Oil Prices Boost the ‘Loonie’

GBP/CAD Exchange Rate Falls as Risk Appetite Returns for Canadian Dollar

The Pound Canadian Dollar (GBP/CAD) exchange rate fell by -0.5% today, with the pairing currently trading around CA$1.720 as increasingly muted fears over China’s coronavirus outbreak has strengthened oil prices and boosted the risk-sensitive ‘Loonie’.

Ray Dalio, co-chief of investment at Bridgewater Associates, one of the world’s largest hedge funds, said that the short-term effects of China’s coronavirus outbreak may be exaggerated.

Dalio also added:

‘I think the most likely outcome is that this virus will be a larger version of SARS that will have a significant temporary effect but won’t have a big long term influence, so the downward market price moves related to it are probably becoming exaggerated.’

With Canada’s economy being particularly sensitive to effects on the global supply chain reaching back to China, any signs of the coronavirus’s spread slowing down is beneficial for the risk-averse Canadian Dollar.

Due to rising hopes that China will take stimulus measures to prevent the virus’s negative impact on the economy, market appetite for the ‘Loonie’ has increased on hopes of a boost for the global economy.

GBP/CAD Exchange Rate Falls, No-Deal Brexit Fears Return

The Pound (GBP) has remained subdued against many of its peers today after it was revealed that the French Foreign Minister, Jean-Yves Le Drain, believes that UK-EU post-Brexit trade negotiations would likely result in the two ripping each other apart.

Mr Le Drain also added:

‘But that is part of negotiations, everyone will defend their own interests.’

In UK economic news, today saw the publication of February’s Rightmove House Price Index, which rose by 0.8%, while the year-on-year figure increased by 2.9%. However, this failed to boost the GBP/CAD exchange rate as UK investors continue to remain subdued over no-deal Brexit fears.

Miles Shipside, director of Rightmove, was optimistic in his analysis, however, commenting:

‘After three and a half years of Brexit uncertainty, dither, and delay, many now seem to have the 2020 vision that this is the year to satisfy their pent-up housing needs.’

GBP/CAD Outlook: Could the Pound Rise on Record-Low Unemployment?

Sterling traders will be looking ahead to tomorrow’s release of the UK ILO unemployment rate report. If it continues to remain at record-lows, however, we could see the Pound begin to edge higher against the Canadian Dollar.

Tomorrow will also see the release of the UK average earnings report for December, which is forecast to rise by 3%.

Meanwhile, Canadian Dollar investors will be awaiting tomorrow’s publication of December’s manufacturing sales gauge, which is expected to rise from -0.6% to 0.5%.

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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts