Whilst Brexit remains an important driver behind GBPCAD exchange rates, the Canadian Dollar is vulnerable to oil price changes given its huge reliance on oil exports. Currently GBPCAD exchange rates are a fair stretch from their pre-Brexit levels. But as mentioned in my Sterling report, economic data for the UK could continue to shine positive in the short term which could equate to further strength for Sterling.
Oil prices could fall further this year
Oil prices are expected to fall following comments from a Saudi Energy Minister last Thursday. Much of the previous strength in prices were caused by sanctions on Iran, outages in Libya and Nigeria and thus, an uptake in demand elsewhere.
The Minister made the comments to Reuters indicating that they plan to continue current supply, turning their backs on discussions with OPEC who manage the supply of oil producing nations.
We could therefore see an uptake in supply, flooding the markets with cheap oil which in turn could see oil prices fall nearer to the $40 a barrel mark. This could have negative implications for the Canadian Dollar.
Could GBPCAD exchange rates return to pre-Brexit levels?
In my view GBPCAD exchange rates will not return to 1.90 for some time, whilst the UK remains in Limbo there is the potential for some strength. However, this strength is likely to be offset by Article 50 which investors are well aware is looming in 2017.
I do however believe its plausible that GBPCAD could reach levels of 1.75 by Christmas, as long as economic data continues to perform and Article 50 remains on the back-burner.
In any event, with so many major events happening this year and next, we strongly advise you stay in touch with your broker. Understanding the markets and how they impact a currency could save you thousands on a transfer. Our team have experienced major economic events over the many years of trading, and are well equipped at helping clients during volatile periods.
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