The Pound has gained over 2% against the Loonie in just the past 4 days, which equates to an additional CAD 6664.50 on a £200,000 to Canadian Dollar exchange.
The Pound has been generally climbing against most currency pairs during this time but the gains vs CAD have been more pronounced as oil continues to hit the headlines for the wrong reasons.
Brent crude oil is currently trading at just over $50 per barrel which is a steep drop from the $56 per barrel it was trading at in the first week of this month.
Canada is the United States largest oil supplier and the 5th largest energy producing country in the world. It’s for these reasons that a drop in the commodities value will have a negative impact on CAD’s value almost irrespective of the heath of the country’s economy.
GBP/CAD is now closer to 1.70 at the mid-market level than 1.60 and this is the first time in around 4 months that the Pound has been trading this high against the Loonie.
The drop in oils value could present a short term buying opportunity for Sterling sellers as OPEC (Organisation of the Petroleum Exporting Countries) have once again announced plans to cut output levels in order to restrict supply and therefore increase the commodity’s value.
Despite my opinion that the Brexit is priced into the Pounds value I think a return to the $55 per barrel levels for oil will result in GBP/CAD weakness.
An annual survey conducted by Reuters earlier this year suggested oil prices could hit $60-$65 by 2018 so it’s worth considering this when planning future Canadian Dollar exchanges.
There will be inflation data out of Canada this Friday at 12.30pm UK time, and if you would like to plan around this events, perhaps through the use of an automatic order due to our time differences, do feel free to get in touch with me at firstname.lastname@example.org.
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