GBP/CAD bounces back on Tuesday after three bearish sessions in a row. Currently, the pair is trading at 1.7000, up 0.27% as of 10:35 AM UTC.
The sterling recorded dramatic losses up until yesterday as the Bank of England (BoE) policymakers turned dovish one by one. Last Thursday, Governor Mark Carney, who is about to leave the central bank in March, was the first to reveal that the bank might cut the interest rate for the first time since 2016. Two more members of the BoE’s Monetary Policy Committee (MPC) shared similar inclinations.
However, the pound is looking more confident today against the Loonie as the latter is under pressure amid declining oil prices. Both WTI and Brent crude brands have declined to lowest levels since the beginning of December, as the Middle East tensions eased.
During the next three days, investors will be able to analyze the demand outlooks for 2020 from three institutions: OPEC, the International Energy Agency and the Energy Information Administration.
However, the tensions in the Middle East can re-escalate at any moment. Iran is currently struggling with protests at home, after it admitted that it had mistakenly shot down a Ukrainian airliner in Tehran, killing dozens of Iranian citizens.
GBP/CAD’s rebound might be also explained by technical analysis reasons, as the pair couldn’t break a strong support line yesterday.
The Loonie might regain its dominance after a recent survey carried out by the Bank of Canada (BoC) found that businesses had noted an increase in sentiment amid easing global trade conflicts. China and the US should sign the phase one trade deal later this week. Also, the indicators of future sales and employment intentions increased as well. The sentiment rose to 0.74, which is the highest figure since 2018.
The BoC said that the results “suggest that business sentiment is broadly positive except in the Prairies, where indicators remain weak. In aggregate, firms’ outlook is supported by expectations of healthy domestic and foreign sales.”