GBP/CAD is increasing on Friday, but this might be a desperate move before the bearish trend continues.
Yesterday, GBP/CAD touched the lowest level since October 2019. Currently, one British pound buys 1.6789 Canadian dollars, up 0.74% as of 10:40 AM UTC.
The pound bounces back after three bearish sessions in a row. The fundamentals are not favoring it though, as oil prices are recovering and the British government is forced to take unprecedented measures to curb the impact of the COVID-19 outbreak.
Finance Minister to Announce More Stimulus Measures
Later today, British finance minister Rishi Sunak is expected to release the government’s emergency plan to prevent an economic collapse. He has been meeting industry associations and trade unions, which are worried about upcoming massive job cuts unless help comes within days rather than weeks.
The minister is now pondering tax holidays for businesses and reversing the pay-as-you-earn tax system to pump money directly to companies.
Sunak will present the details of the plan during Prime Minister Boris Johnson’s daily news conference on coronavirus scheduled for 5:00 AM GMT.
On Wednesday, the finance minister told the parliament:
“We are working at pace, urgently, to see what further support we can put in place, particularly around employment support, looking at some models elsewhere and looking at what model might work best for workers here today.”
However, members of the Labour Party consider that Sunak was acting too slowly to save people’s jobs.
As the virus was spreading in London and the whole country, the panic caused the pound to crash to its lowest level against the USD since 1985.
To save the economy, the Bank of England cut the interest rate to 0.1% from 0.25%, which is a record low. Besides this, the central bank pledged another 200 billion pounds of bond purchases.
The GBP/CAD is advancing even though Canada recently announced that it had added 7,200 jobs in February, which was the eighth straight month of job gains. Payroll services provider ADP said that hiring in the construction industry was the main contributor.
Later today, Canada will release its retail sales and core retail sales data, which might add to the volatility of the pair.
