Pound-Canadian Dollar could stay supported if trade tensions weigh on CAD, while firmer oil prices may help the Loonie recover.
The Pound Canadian Dollar (GBP/CAD) exchange rate rose slightly on Monday amid a muted but positive response to a speech from the UK Chancellor.
At the time of writing, GBP/CAD was trading at CA$1.8718, up marginally on the day.
DAILY RECAP:
The Pound (GBP) traded with modest gains on Monday as markets reacted to a speech from UK Chancellor John Healey.
Healey reiterated his commitment to fiscal discipline, attempting to soothe recent concerns about bond market turmoil. He also focused heavily on driving growth in the UK, pointing to government investment, innovation, devolution and reduced red tape as ways to get the country’s economic cogs whirring.
The reaction to the Chancellor’s speech seemed somewhat positive, although the impact was muted. Sterling edged up against many of its peers but the gains were limited in scope.
Meanwhile, the crude-linked Canadian Dollar (CAD) was mixed on Monday as oil prices wavered.
Crude initially ticked higher amid ongoing tensions in the Middle East, before easing back during European trade.
CAD investors also seemed cautious ahead of Canadian counter-tariffs on US goods, due to take effect on Tuesday.
Near-Term GBP/CAD Forecast: Oil Price Movements to Drive the Pairing?
Looking forward, a lack of UK and Canadian data on Tuesday could leave the GBP/CAD exchange rate to trade primarily on external factors.
Global crude prices could be key, with investors keeping an eye on events in the Middle East. Escalating tensions could see oil prices climb, particularly with the US and Iran recently threatening to target oil tankers and energy companies – which in turn could boost the crude-linked Canadian Dollar.
Conversely, if shipping picks up through a new route in the Strait of Hormuz agreed by Iran and Oman, easing oil prices could dent CAD.
Furthermore, the Canadian Dollar could face headwinds amid US-Canada trade tensions. If Washington announces further retaliatory measures as Canada’s tariffs come into effect, CAD could slide.
Our currency coverage draws on live market data, official economic releases and published bank research.
