GBP/CAD has extended its rally on Wednesday, showing a bullish bias for the fourth session in a row. Currently, the pair is trading at 1.7130, up 0.79% as of 10:40 AM UTC.
The pound has managed to recover some of the previous losses despite a series of disappointing data released earlier today.
The Confederation of British Industry (CBI) said that retail sales tumbled this month as the new coronavirus hurt demand for products other than food. The retail sales balance fell to -3 in March from +1 last month. The outlook for April is even worse – down to -26, which is the lowest since the same period of 2009.
CBI economist Ben Jones explained:
“These are extraordinary times for the retail sector. Grocers are seeing a temporary increase in demand because of coronavirus. But many other retailers are seriously suffering as households put off non-essential purchases and social distancing keeps people away from the high street.”
Separately, the Office for National Statistics (ONS) said that house price growth slowed in the first month of the year, after accelerating at the fastest pace in 11 months in December. House prices in January were 1.3% higher than in the same period in 2019, down from December’s 1.7% reading. The ONS said:
“Over the past three years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.”
In the morning, the ONS said that British inflation declined last month even before the COVID crisis started. Economists anticipate a further drop in the next few months due to the decline in oil prices. The consumer price index (CPI) fell to 1.7% in February, down from a six-month peak of 1.8% in the previous month.
CAD slowed down by oil prices and coronavirus concerns
Despite the bearish fundamentals, the sterling has managed to maintain dominance this week, as the Canadian dollar is dragged down by oil prices and the same coronavirus concerns. Both Brent and WTI crude futures fell into the negative territory after initial gains in the morning.
Recently, Barclays slashed its estimates for average WTI and Brent prices this year by $12, to $28 and $31, respectively.