As with most of the other major currencies, the Canadian Dollar has seen it’s consistent gains against the Pound reversed since the start of the month. The below table shows the market movements for GBP/CAD in the last 3 weeks:
|Currency Pair||% Change||Difference on £200,000|
Despite a flow of positive economic data, the global rise in oil prices (Canada’s main export industry) and a recent hike of interest rates from the Bank of Canada, the Loonie has failed so far this month in consolidating its considerable gains during this summer. The recent North Korean threats have naturally sapped investor appetite for riskier commodity currencies like the Canadian Dollar which has helped the Pound build a foundation from which to mount a sturdy recovery, having gained 5% over the last 20 days.
We have now reached the best time to buy Canadian Dollars since the end of June. If you have a CAD requirement with GBP, why not capitalise on this position before Brexit uncertainty rocks the boat once more.
I wouldn't be too alarmed if I was holding Canadian Dollars however. The outlook continues too look promising long-term. Yesterday Canada and Europe’s CETA agreement came into play. The free trade alliance includes tariff slashing, improved mobility for employees between nations and the recognition of respective professional qualifications in a bid to strengthen the bond between Canada and EU members. The fact Canadian company’s now have increased access to the European market can only bode well for its growth forecasts. If Brexit continues to anchor Sterling than I expect the loony to fully capitalise, becoming increasingly expensive over time and potentially pushing back towards the low 1.60s.
Looking short term, yesterday’s wholesale sales came in surprisingly higher than expected which could give us an indication as to how today’s inflation stats will fair. As a result there is a good chance the CAD will start the day more expensive. Much hinges on how the markets react following May’s speech this afternoon. If things go well, I expect the Loonie to become cheaper.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353.