GBP/CAD continues to decline on Friday, concluding a bearish week. Currently, the pair is trading at 1.7304, down 1.13% as of 10:46 AM UTC. This is the fourth consecutive bearish session, and the price has lost 3.30% since Tuesday. On Monday, the pair hit the highest level since April 2018, as oil prices crashed by about 30%. Eventually, the Loonie has recovered, benefiting from the pound’s weakness amid the coronavirus panic in Europe.
Oil Prices Support Loonie
Oil prices have increased by over 5% on Friday, helping the Canadian dollar extend its gains against the sterling. Despite the price surge, oil futures are about to experience the worst weekly performance since the financial crisis in 2008. Investors are worried about Saudi Arabia’s plans to increase production amid the escalation of a price war with Russia. Also, demand for oil is expected to drop due to the pandemic.
Canada is an oil-dependent economy, which is why the Loonie reacts promptly to any fluctuation in crude prices. Speaking about today’s oil price increase, Michael McCarthy, a senior strategist at CMC Markets, commented:
“It’s been a very rough week and so it’s not impossible people are locking in ahead of the weekend. I would also point out that in the context of the recent moves it’s not really a major move.”
Goldman Sachs analysts said that the oil market might see a record surplus of around 6 million barrels per day by next month.
Despite the prospects for the oil market, the Canadian dollars manages to stay strong against the British pound at the end of this week. The UK economy is facing a difficult period after the stock market saw the biggest decline since 1987. The government has moved to the next phase of its strategy to curb the impact of the virus, which means more drastic measures will be implemented. Prime Minister Boris Johnson said:
“It’s going to spread further. I must level with you, level with the British public – more families, many more families, are going to lose loved ones before their time.”
Elsewhere, Canadian Prime Minister Justin Trudeau said that he would be in isolation after his wife, Sophie Gregoire Trudeau, tested positive for COVID-19. Nevertheless, she said that she would “be back on my feet soon.”
Canada has confirmed 145 cases of the new coronavirus and one death, while the UK has reported 590 cases and 10 deaths.
