It has been a particularly testing week for Canadian dollar exchange rates with the Loonie hitting multi-week lows against the Euro and the US Dollar as a result on the ongoing oil crisis. Indeed with oil inventories pilling up around the globe as the coronavirus continues to sap demand, US and Canadian Crude fell to record lows, leading to a hefty sell off in Canadian dollars as investors positioned themselves on safer commodities.
Historically the Pound too would have typically managed to capitalise on Canadian dollar weakness but ever since COVID-19 conspired with the lack of clarity Brexit talks were providing. it seems however sterling recently tends to fall within the bracket of riskier currencies that is suffering as a result of this global downturn.
It could certainly go some way to demonstrating how little faith the market’s seem to be holding in the UK’s prospects amidst the coronavirus storm. Potentially something worth considering if you are holding sterling and are looking to buy foreign currency in the short to medium term.
GBP Already on the Back Foot?
It could be a particularly interesting day ahead for GBPCAD exchange rates with key inflation data releases coinciding from both sides of the Atlantic holding the potential to sway market support given the current oil crisis anchoring the pair against their major currency counter parts.
This morning’s early releases from the UK’s National Statistics painted a surprisingly positive picture with slight increases in prices seen across retail and manufacturing sectors. Naturally, UK productions on a whole has taken a hit although nowhere near as bad as the markets had initially expected. Could we see a change in fortune for sterling exchange rates as a result? This morning’s figures might go some way to justifying Chancellor of the Exchequer Rishi Sunak’s optimism from last week at least and so further investor appetite could be drawn to the pound as a result. So far today, the pound is slightly up against both the Euro and the Dollar, although any substantial inroads against the Canadian dollar are yet to be seen. Perhaps the markets are waiting for tomorrow’s potentially pivotal Public sector net borrowing release before committing. Should we see signs of escalating debt as a result of the virus further volatility to sterling exchange rates could follow.
On the other hand, yesterday’s retail sales contraction from statistics Canada didn’t seem to have wobbled investor appetite for the Loonie with GBPCAD still locked under the that all important 1.75 mark.
It will be interesting to see if this afternoon’s inflation figures along with key housing data might give investors some insight into how the virus has impacted consumer confidence in Canada and which trends could last as a result, depending on how long the lockdown continues.
If you would like to learn more on economic factors influencing either GBP or CAD exchange rates for an upcoming currency transfer, feel free to contact myself directly using the form below.