After the interbank exchange rate breaking below the 1.70 psychological support level back on the 22nd of May for a brief moment, the pound has once again found support at this same level. Yesterday is a good example of this, with the day low hitting 1.6993 before returning back above 1.70.
|Currency Pair||% Change (Month)||Difference on £200,000|
Those of our clients with an upcoming currency requirement involving the pair should be aware that it’s predominantly sterling weakness that has pushed the pair lower, as there are a number of reasons for the Canadian dollar to be losing value at the moment, but price movement suggests the pound is the weaker of the two currencies.
Oil is one of Canada’s main exports, and the value of CAD often ties into oil’s price fluctuations. This week oil has hit its lowest level since January after U.S. crude inventories unexpectedly surged, owing to concerns surrounding the global economy due to trade wars developments between the US and China/Mexico. Usually this kind of headline grabbing movement would result in a weaker loonie, and whilst we’ve seen CAD lose value against the US dollar amongst other major currencies, it’s remained unchanged against the pound due to pound weakness.
Longer term, I think we could see CAD exchange rates come under pressure owing to the global slowdown fears, but for now the GBP/CAD interbank pair in particular remains just north of 1.70, a drop below this level could occur if a hard-brexiteer win the Tory leadership contest.
This afternoon at the same time as US Non-Farm Payrolls, Canadian Unemployment and the Net Change in Employment figures will be released. The unemployment rate is expected to remain at 5.7% and I would expect to see any deviations from this figure potentially result in volatility for the loonie. Do feel free to get in touch if you wish to be kept updated regarding any exchange rate changes.
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