GBP/CAD Exchange Rate Strengthens Amid Record Diesel Prices and Elevated Oil Costs
The Pound-to-Canadian-Dollar exchange rate saw an increase on Monday as UK diesel prices reached a record high, fueling bets that the Bank of England will raise interest rates in the coming months.
Diesel prices averaged 199.18p per litre across forecourts in the UK, surpassing the all-time high set in June 2022 following Russia's invasion of Ukraine.
The surge in diesel prices tends to have a ripple effect on the wider economy as businesses relying on diesel vehicles for transportation increase their prices to offset the rising fuel costs.
This led to higher inflation expectations, prompting investors to bet on a more hawkish approach from the BoE. Meanwhile, the Canadian Dollar found some support due to elevated oil prices, with Brent crude reaching $108 per barrel and WTI crude increasing modestly but remaining below its early-September high.