The pound has been climbing against the majority of major currency pairs recently, with GBP/CAD hitting a 1-month high of almost 1.76 after hitting a 6-month low of 1.66 just a few weeks ago.
It’s no secret that the pound tends to suffer during market sell-offs and we saw this in March. As the reality of the Corvid-19 lockdown spread, the pound was sold off in such a dramatic fashion that cable (GBPUSD) fell to a 35-year low and GBPEUR fell to the lowest level in 10-years. GBP has staged recoveries against all major currency pairs since then, and with the sell-off of oil prices the Canadian dollar has been weakening at the same time that sterling is climbing and this is why we’ve seen such volatile market movements between the GBP/CAD pair.
Moving forward, as lockdown measures are lifted it wouldn’t be unusual to see the pound continue its rebound as the currency has so far benefited from talks of the worst of Corvid-19 being over.
Canadian Dollar Impacted by Oil Price War
With oil being one of Canada’s key exports and therefore most lucrative, the oil price war and Saudi Arabia’s price cuts could end up having a negative impact on the Loonie’s value so it’s worth following updates from OPEC (Organization of Petroleum Exporting Countries) as they can have a direct impact on CAD exchange rates.
Later today the Bank of Canada will be issuing a Monetary Policy report so those of our clients with a CAD currency requirement should pay close attention to the comments in case there are any allusions to future monetary policy. Economic data due out of the UK is light for the remainder of the week but we could see the pound’s value to be driven by Corvid-19 updates as we’ve seen recently. The pound responded well to talks of some European nations lifting strict lockdown rules so if you have a currency requirement involving GBP it’s worth monitoring this issue.
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