GBP/CAD is about to conclude a bullish week amid the general panic caused by the coronavirus epidemic. The pair is now trading at 1.7325, up 0.44% as of 11:00 AM UTC.
GBP Strengthens on Several Factors
The sterling has extended the rally encouraged by several factors, including positive updates from GfK, Nationwide, and increasing hopes that the UK and the European Union would manage to reach consensus during trade talks despite the tensions.
Earlier today, mortgage lender Nationwide said that British house prices increased at their fastest annual rate since July 2018. Prices rose 2.3% year-on-year in February, in line with analysts’ median forecasts.
Nationwide’s chief economist Robert Gardner explained that “the decisive election outcome may have provided a boost to buyer sentiment.” However, he admitted that there were still major issues ahead, including the coronavirus epidemic and the tensions with the EU.
“Overall, we expect the UK economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat in 2020 as a whole,” he added.
In the morning, market research firm GfK said that its consumer confidence index has increased for a third consecutive month, to -7 from -9 in January. Analysts expected a modest increase to -8.
The pound has consolidated its dominance against the Loonie after UK Prime Minister Boris Johnson said that he was very optimistic about the trade talks with the EU.
“We want a great relationship with our friends. We buy huge quantities of their stuff, they buy huge quantities of our stuff. There’s just a big chance there,” the PM told Sky News on Thursday.
On the other side, Europe’s Brexit negotiator Michel Barnier also admitted that a deal was possible by the end of the year. Previously, he used to focus on how difficult a trade deal would be to achieve by that time.
Oil Prices Drag CAD Down
Not only the pound looks confident, but the Canadian dollars has shown signs of weakness amid tumbling oil prices. Both Brent and WTI crude oil brands are set to conclude their works week in four years. Brent declined below the $50 mark for the first time in two and a half years.
Investors fear that the coronavirus outbreak would impact oil demand.
Fereidun Fesharaki, chairman of energy consulting group FGE explained:
“There is now the real danger of a major economic shutdown in large parts of the world as the coronavirus is now spreading rapidly, with a potential huge downward impact on oil demand.”
