Some of this week's GBP/CAD movement can be attributed to the recent uncertainty surrounding UK politics, with pressure mounting on Theresa May’s leadership and further Brexit ambiguity, but the Canadian Dollar has also strengthened on the back of positive talks with the US over a renewed North American Free Trade Agreement.
|Currency Pair||% Change||Difference on £200,000|
As a result of the last few days movement on GBP/CAD a $200,000 purchase could have been £1,600 more expensive if timed poorly, which highlights just how important it is to have an experienced currency broker keeping you up to speed with the latest market movements.
The breakdown in NAFTA talks, a free trade agreement between the US, Canada and Mexico, has been ongoing for quite some time now and whilst there is still no agreement in place the CAD has been suffering. With the US being Canada’s largest trading partner, securing a free trade deal with them is crucial to Canadian economic performance and therefore the value of the Loonie.
There have been positive talks between the US and Canada this week however which look to have relived some of the impasse, with Canada agreeing to offer the US limited access to their dairy market. This has been a sticking point in negotiations as Canada have previously placed heavy tariffs on dairy imports, something which was never originally part of NAFTA. This concession from Canada has been seen favourably by the US and could help move talks further in the future.
Another factor in the CAD’s rise this week is the rise in Brent Crude Oil prices, which has been steadily climbing over the past 30 days and yesterday reached its highest price per barrel, at over $80, since May. The rise in prices has come due to an increase in demand following a slowdown in supply from the US and Iran.
As Brent Crude Oil is Canada’s largest export any rise is seen as a positive for the Canadian economy and therefore boosts the price of the CAD. For any clients selling CAD now would be an excellent time to capitalise on some of the best rates we have seen so far in September.
For clients buying CAD with Sterling, the continued political uncertainty in the UK, coupled with positive sentiment surrounding Canada is likely to continue to make a CAD purchase more expensive. Staying in close contact with your account manager could help you take advantage of any spikes in your favour and limit your exposure to market volatility.
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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