This report examines the potential affecting factors of the GBP/CAD exchange rates in the short term. The table below shows the different when purchasing £200,000 at the highest and lowest levels of the last month.
|Currency Pair||% Change||Difference on £200,000|
The Bank of Canada announced yesterday to once again keep Interest rates on hold at 0.5%, as they have been for almost two years. Stephen Poloz, the Governor of the Bank of Canada, spoke of an improvement in economic data and confirmed that the current level of stimulus measures implemented are appropriate at present.
Mr Poloz also confirmed that Canada have adjusted to the decline in oil prices, and that the jobs market is ‘robust’ with increasing consumer spending. Up until now the stance from the BoC has been a particularly muted one, however with so much positive economic data, it would seem that the Canadian economy is beginning to get back on its feet.
The positive tone of the announcement allowed economists to understand that the bank is leaning more towards raising rates rather than cutting them, although likely not until next year. This was welcome news which lead to the Canadian Dollar strengthening against the Pound, Euro and US Dollar, and our well informed clients were able to take advantage of the almost 2 cent jump against the Pound, earning an additional £1,500 on a $250,000 transfer.
Later today, the Organisation of Petroleum Exporting Countries (OPEC) will meet to decide the next steps regarding crude oil production levels. In November last year it was agreed to reduce output by 1.8million barrels a day, which all OPEC and Non-OPEC members agreed to, however this deal is due to expire at the end of June. This cut in production has helped the price of oil to increase from $35pb to $55pb over the last few months. As oil is by far Canada’s largest export, when the price of oil increases, usually so does the value of the CAD.
It is expected that oil ministers will agree to extend the current curb in production for another 9 months, and if this is the case I would expect the CAD to strengthen significantly following this announcement. If you are looking to buy Canadian Dollars, it may be wise to speak with your Account Manager here before this announcement to avoid any further potential losses.
Thank you for reading today's Canadian Dollar market report, I would greatly appreciate any feedback you have and would be glad to respond personally. Please feel free to get in touch here.
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