British pound exchange rate holds as UK fuel shortage eases

October 5, 2021 – Written by John Cameron

GBP / CAD on the rise as higher oil prices boost the Canadian dollar

The exchange rate of the British pound and the Canadian dollar declined slightly today, countering the trend of the exchange rate gains of the British pound against other currencies due to the strength of the CAD supported by the rise in prices crude oil.

GBP / CAD had made gains earlier in the European session before retreating near the start-of-day levels of 1.7120 at the time of writing.

British Pound (GBP) extends rally as fuel shortages ease

The British pound rallied against the majority of currencies during Tuesday’s European session – with the exception of the Canadian dollar – as fuel shortages eased in the UK’s south-east.

London and the south-east of England have suffered disproportionately from ongoing gasoline shortages, while reports today estimate that 64% of gas stations have gasoline and diesel, with 15% empty.

Petrol Retailers Association (PRA) Executive Director Gordon Balmer said:

“Today’s figures show that the situation is still improving around London and the South East.
“Although there has been a significant reduction in dry sites, these areas still lag behind in having both grades of fuel available compared to the rest of the UK.
“Fuel supplies are increasing in the rest of the country: 86% of sites say they have both qualities of fuel thanks to regular deliveries and stabilizing demand, 3% only have one quality and 11% are dry.
“Members report that they are now receiving deliveries from military drivers using commercial tankers, but additional measures must be taken to meet the needs of the disproportionately affected areas.”

However, despite the improving fuel situation, UK fuel prices peaked in eight years during the crisis, hitting consumers with higher prices and adding to UK inflationary pressures that could affect growth UK economy.

The UK services PMI printed earlier in Tuesday’s session inflated the pound after beating expectations.

The finalized September data has been revised up from the initial estimate of 54.6 to 55.4, also higher than August’s figure.

The pound sterling’s exchange rates have received a boost to add to its recent streak of gains, as data points to a strong recovery in service sector activity.

Meanwhile, gas prices have hit a new high, adding to inflationary pressure and higher costs for businesses and consumers, posing a continuing threat to UK economic growth.

Canadian dollar (CAD) boosted by soaring oil prices

The oil-sensitive Canadian dollar was once again supported by rising crude prices during Tuesday’s session.

CAD exchange rates have risen against other major currencies, with WTI crude reaching seven-year highs of $ 78.95 a barrel amid a global energy crisis pushing up the price of oil.

OPEC’s decision yesterday to stick to the forecasted 400,000 barrels per day has supported increases in crude prices as many analysts expected higher production amid increased demand against a backdrop. soaring natural gas prices.

The latest trade data from Canada also supported the “loonie” after the numbers beat expectations.

The trade surplus unexpectedly rose to C $ 1.94 billion in August, as exports rose 0.8% to a record high and imports declined 1.4%.

GBP / CAD exchange rate forecast: Canadian dollar to strengthen amid soaring oil prices

In the absence of any notable UK data releases, the pound will likely remain sensitive to developments in ongoing fuel shortages in the UK, although the situation appears to be improving.

Stagflation concerns persist and could limit sterling exchange rates amid mounting inflationary pressure, supply chain fragility and staff shortages.

Meanwhile, the Canadian dollar may continue to rise due to soaring oil prices.

As OPEC sticks to its planned production despite warnings of a growing deficit between supply and demand, WTI prices could continue to rise above $ 78 a barrel, and in turn strengthen the oil-sensitive DAC.

High impact economic data could also cause the Canadian dollar to move during the week.

Another strong expansion in the Ivey PMI for September could provide support for the ‘Loonie’ as trading conditions remain strong.

In addition, an expected drop in Canadian unemployment from 7.1% to 6.9% in September will likely also support the Canadian dollar exchange rates.

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