The Canadian dollar is still suffering at the hands of the Coronavirus outbreak which has captivated headlines for the past couple of weeks. The virus shows no signs of stopping and has continued to spread throughout the world from the originating Chinese province of Wuhan. The risk-sensitive Canadian Dollar has suffered after oil prices fell on expectations that the coronavirus outbreak will lead to reduced demand for oil. Meanwhile, the GBP/CAD exchange rate rose as GBP celebrated the BoE’s decision to hold their interest rate after days of worries concerning a rate cut.
Coronavirus Causes the Canadian Dollar to Fall as Oil Prices Drop
The coronavirus outbreak has caused havoc throughout the world as the virus shows little signs of being controlled. With fatalities in the double figures and thousands infected, the impact of the disease is likely to continue for some time. For the Canadian dollar, the virus has seen the price of oil drop as the sector expects a reduced demand as a result of the virus. Crude oil prices dropped yesterday to US$58.89 per barrel for Brent crude oil, US$52.07 for West Texas Intermediate and US$31.54 for Western Canadian Select.
GBP Rises After BoE Decides to Hold Interest Rate at 0.75%
Yesterday marked the release of the Bank of England’s (BoE) interest rate decision. The central bank decided to keep the interest rates the same at 0.75%. This was a welcomed announcement as the odds of a rate cut rose to around 50% right up until the announcement, causing many investors to flee to safe-haven currencies like the USD. This investor flee saw GBP drop in support and spurred on its recent weakness, allowing other currencies to edge over it. But now with the rate remaining still, GBP has begun to claw back previous gains as support for the currency floods back in.
GBP’s rise over the past 24 hours has seen the currency edge back over the Canadian Dollar and many other rivals. Currencies like the Canadian Dollar benefitted from the Pound Sterling’s recent weakness as investors pondered the outcome of the BoE decision. But now the GBP appears to have the upper hand once more and looks to build upon its recent economic data releases. GBP is expected to continue rising as support for the currency increases as safe-haven investors return to the now steadier pound sterling.
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