The Pound Canadian Dollar (GBP/CAD) exchange rate faced headwinds on Thursday as rising oil prices reflected positively on the commodity-linked ‘Loonie’.
At the time of writing, GBP/CAD traded at around CA$1.6596, which was roughly down 0.4% from Thursday’s opening rate.
The Canadian Dollar (CAD) was up against the majority of its peers on Thursday, supported by rallying oil prices.
WTI crude oil traded at around $74 per barrel on Thursday afternoon. Up roughly 2% from the one-year low of $71 struck on Wednesday.
News of China rolling back zero-Covid restrictions appeared to be the key catalyst behind the price recovery. China is the largest importer of crude oil in the world, so investors were hopeful an easing of restrictions will revive global demand.
However, lingering fears about a global recession capped the recovery in oil prices. Both the US and Europe have reported a slowdown of manufacturing activity in recent months. Reduced demand from both territories could somewhat offset renewed Chinese consumption.
Elsewhere, the Bank of Canada’s (BoC) raised interest rates by a 50bps on Wednesday. Although dovish comments from the BoC about ending interest rate hikes have since disappointed investors. 
‘Looking ahead, [the] Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target.’
This expectation also factored into the ‘Loonie’s’ limitations on Thursday.
The Pound (GBP) was down against the majority of its peers on Thursday. Pushed lower by mounting economic pressures.
The latest UK Report on Jobs from KPMG and REC showed that hiring growth slowed down last month. Many businesses are already struggling amid rising costs and strike action and cannot warrant hiring full time workers.
‘This month’s data emphasises that while employers are moderately more cautious in the face of economic uncertainty… [P]ermanent recruitment activity has dropped from the very high levels of earlier in the year.’
Carberry goes on to say temporary work has increased to cover the Christmas uptick. However, as business activity continues to slow, the report highlighted the UK’s deepening economic crisis. Many believe that without government intervention, hundreds of businesses could collapse in the new year.
This bleak outlook kept investors cautious on Thursday which left the Pound with little support.
Looking ahead, the Pound Canadian Dollar exchange rate could be driven by the BoC on Friday.
BoC deputy governor Sharon Kozicki is due to speak. If her speech reiterates the BoC’s dovish statement from Wednesday, then CAD could fall.
Otherwise, it’s likely investors will focus on the oil markets. If crude prices continue to recover, then the oil-linked ‘Lonnie’ may be able to offset dovish BoC comments.
Turning to the UK, a continued lack of data could weigh on the currency. Domestic headlines focusing on the cost-of-living and the impact it’s having ahead of Christmas could temper movement.
It’s also possible that the increasingly risk-sensitive Pound could gain impetus through risk appetite. If China continues to report on Covid easing Sterling could find some support.
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GBP/CAD Outlook: Pound Canadian Dollar Rate Falls As Oil Prices Rebound – Exchange Rates UK
