Heading into the second day of the trading week, the GBPCAD interbank exchange rate finished up yesterday at around CA$1.7209. This was positive news for the GBP, but not so much for the Canadian dollar. The price of oil continues to be threatened by the heightened coronavirus fears, and with a lack of positive news since the claimed breakthrough treatment from Chinese scientists, the fear continues to mount. Meanwhile, the GBP will look towards its Gross Domestic Product (GDP) and manufacturing data releases later today for a rallying point as it enters the week having been named the worst performer out of the major currencies last week.
CAD Battered by Spiralling Oil Prices
The outbreak of the coronavirus has toiled with the price of oil for weeks. As both a risk and commodity linked currency, the Canadian dollar has suffered more than most. The price of oil initially dropped after fears of a dwindling demand following the news of the virus in China. Oil continued to be traded at a lower price for some weeks, until a claim from Chinese scientists broke out which noted they had found an effective treatment for the virus. However, since this headline, there has been little to no positive news which has heightened fears once more. The virus has overshadowed recent Canadian housing data which rose from the previous month. On any other occasion this would have likely boosted the CAD, but given the seriousness of the outbreak, the CAD has been limited.
Commenting on the crisis, Ole Hanson of Saxo Bank noted that the concern remains that the wider markets are yet to feel the full force of the disruption. As China is the world’s most dominant consumer of raw materials, the impact continues to be felt strongly across key commodities and the world is facing the biggest demand shock since the 2009 global financial crisis.
GBP Edges Over CAD Despite Lack of Data, but GDP Value Looms Later Today
For pound sterling, it was able to edge over the Canadian dollar despite a lack of data yesterday. The UK’s recent data has pointed to a good level of growth which has allowed the pound to trade reasonably, but the fears over a no-deal Brexit have been the limiting factor for the GBP. The pound will see its GDP figure for Q4 in 2019 released at 09:30 today, if the figure beats expectations the GBP could edge further over the CAD.
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