The pound to Canadian dollar interbank exchange rate has been trading slightly higher in the last couple of days on the back of oil price concerns in Canada, and we have seen it range between a low of 1.7356 and 1.74.
UK services and manufacturing purchasing managers index came in markedly lower than expected at 12.3 versus a forecast 29.0 and 32.9 against a forecast 42.0. respectively UK Confederation of British Industry industrial trends came in lower than expected at -56 versus a forecast -52. This morning UK retail sales figures for the month of March were released showing a sharp fall to -5.1% against a forecast -4% and a previous reading of 0.3%.
Call for 100% Backed UK Loans
The Confederation of British Industry yesterday said the UK government needs to relax lending terms for government-backed loans to smaller businesses to stop them going bust during the Coronavirus Pandemic.
Rishi Sunak, the UK finance minister has not yet agreed to 100% government guarantee to lending to small businesses, rather making banks carry 20% of the risk. This will simply delay crucial fund getting to UK businesses while banks weigh up lending the money to businesses and take a long time to process applications. 16,624 loans have been approved, but there are still around a further 20,000 still waiting to hear.
The CBI said there should be simplified procedures for loans under 25,000 pounds and that loans up to 500,000 pounds should benefit from a 100% guarantee as well as an option of repayment over 10 years.
Canada Responsive to Oil Prices and Demand
The collapse of oil demand and prices is going to have a negative impact on Canada’s economy, as their key market the US is saturated with oil. It is reported that some of Canada’s oil producers have already started shutting down, as they have no further space to store oil.
Meanwhile the transportation sector in Canada has also taken a big hit, with a number of people being put out of work as a result. While the Canadian economy depends a lot on its main trading partner, the US, the quicker they can recover from the Coronavirus pandemic the better it will be for the Canadian economy.
Is it possible therefore the GBPCAD forecast could come in higher if the Canadian dollar weakens on weaker oil prices and demand.
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