As a commodity based currency, the Canadian Dollar continues to feel the effects of fluctuating oil prices and the unresolved Nafta agreement. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The CAD has come under increasing pressure recently, losing ground against a host of the major currencies. These losses have been particularly apparent against both Sterling and the USD over recent weeks, as investors have continually shied away from the Loonie. Looking at the current trend, it is difficult to ignore Wednesday’s interest rate hike by the US FED and a significant breakthrough in Brexit talks, as reasons the CAD has struggled to gain a foothold against either currency this week. Up until yesterday afternoon its value had decreased at a rather alarming rate, although there was some light at the end of the tunnel for those clients looking to exchange CAD positons, as it found support around 1.83 against Sterling.
If it had not been for the new head of the FED Jerome Powell remaining fairly dovish in terms of further multiple interest rate hikes this year, things could have got even worse. The on-going uncertainty around NAFTA talks and increased US Duties, has led to some serious concerns amongst member of the Bank of Canada (BoC) in recent weeks.
Canadian growth forecasts for this year have shrunk, with the external factors mentioned above cited as the main reason the Canadian economy will see a significant slowdown over the coming months.
This will be a complete reverse to 2017, when Canada’s economic progress exceeded most expectations. An improvement in global growth helped to boost Canada’s commodity based economy, which in turn allowed the CAD to make progress against many of the mainstay currencies.
With oil prices fluctuating and unlikely to return to the highs of recent years, this is also likely to have an impact on the CAD over the coming months, who rely heavily on the export of crude oil. With the US being their main trade partners concerns over Trump’s proposed tariffs, in which ever form they may come, is seemingly driving investor confidence down and the CAD is being handicapped as a result.
Looking more closely at the current exchange rates and GBP/CAD did recover from a low of 1.83 and had broken back below 1.82 by the close of European trading hours. Despite the CAD finding some support Sterling has gained almost 5 cents in recent weeks, which is the difference of approximately £1,500 on a 100,000 CAD/GBP currency exchange.
Whilst the Pound has seen its levels improve and its positive trend upheld, I am still wary that Brexit talks could turn at any point. We are starting to see progress but with so many unanswered questions regarding the future standing of the UK economy, it may be prudent take advantage of the current rates and remove any risk ahead of crunch trade talks with the EU.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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