GBP/CAD is recovering some of the previous losses on Monday, departing from the lowest level since mid-January.
Currently, GBP/CAD is trading at 1.7089, up 0.68% as of 9:30 AM UTC.
Oil Prices Drag CAD Down
Both the British and Canadian economies are greatly affected by the market turmoil caused by the coronavirus pandemic. However, the Loonie went lower because Canada is a trade-reliant and oil-depending economy. Oil prices have declined in the morning as the US Fed’s emergency move to cut the rates and launch unprecedented quantitative easing failed to calm the markets.
WTI crude futures dropped below $30. Elsewhere, China reported that factory output tumbled at the sharpest pace in three decades, while retail sales and fixed-asset investment saw record declines.
Central bankers do their best to curb the impact of the COVID-19 pandemic, but investors are worried that their effort is in vain.
FXTM chief market strategist Hussein Sayed commented:
“It’s becoming evident that the major central banks across the globe are using all their available tools to prevent a crisis, but it seems the fear of the pandemic is taking control of investors.”
Oil prices first crashed by 30% last Monday, after Saudi Arabia effectively declared a price war with Russia. Saudi Arabia’s top oil producer boosted output and cut prices to increase sales in Europe and Asia.
British Economy Also Hit by Coronavirus
While the pound is a better position against the Loonie, the British economy is heavily impacted by the COVID-19 as well. Dominic Cummings, who is Prime Minister Boris Johnson’s senior adviser, told Reuters that the UK would make further announcement today about the measures against the outbreak.
The death toll from the virus surged by 14 to 35, while the total cases rose by 20% to 1,372, the UK health authorities said yesterday.
Earlier today, trade body Make UK and accountancy firm BDO said that manufacturing in the UK dropped sharply in the first months even before the epidemic started in Europe.
Seamus Nevin, chief economist at Make UK, stated:
“Even before the current situation, the shocking drop in exports could not have come at a worse time ahead of potentially difficult trade talks where the clock is running down fast.”
