Central interbank exchange rates for pound sterling to Canadian dollars have been slipping recently with rates now sitting close to a month low. Brexit concerns have been heavily contributing to the fall in the value of the pound recently.
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The most recent economic data for Canada has been rather negative as new house sales fell dramatically in March from February and were lower than the market expected. Tomorrow we also have the monthly report on house values which is also expected to show a contraction.
These figures have however been somewhat overshadowed by news elsewhere. Brexit news in the UK continues to have an impact on the pound but the Canadian dollar has strengthened sharply against most currencies this last week as oil prices have surged.
This oil rally came after an armed conflict in Libya started and escalated near crucial oil fields. US sanctions and the Organization of the Petroleum Exporting Countries (OPEC) +, production reduction plans, have also contributed to oil prices climbing. With oil being Canada's largest export, any increase in value normally pushes up the price of its currency respectively.
Growth forecasts within Canada have come out recently looking sluggish and with figures lower than previously expected. This has in turn resulted in forecasters suggesting that the BOC may well look at changing their forecasts for interest rates going forward. Interest rates are a main driver for any currency so any projected reduction in rates normally results in the currency in question weakening. The governor of the BOC, Lynn Patterson, suggested that the central bank will potentially look at changing its policy at its next meeting scheduled for 24th April.
Deputy Governor Wilkins has a scheduled speech on Thursday this week which could also be interesting.
As a result this is something to watch if you have exposure to the CAD as commentary supporting the potential change in interest rate policy has the potential to impact the CAD’s value.
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