Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements on Tuesday affecting Canadian Dollar rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
The Bank of Canada recently raised rates from 0.5% to 0.75%. This was the first raise in interest rates in seven years. The justification on this change in monetary policy was strong growth across all industries and confidence these levels can be sustained. We have seen a readjustment in buoyancy levels since the rate hike. GBP/CAD dropped from the 1.68-1.69 to where we now sit in the 1.64s. There was a brief strengthening for Sterling but this was soon lost due to the recent poor inflation data from the UK.
Despite the seemingly sound justification for the rate hike form the Bank of Canada I am of the opinion it may not have been a wise move. Oil is Canada’s biggest export making up 20% of exports. The Organisation for Petroleum Exporting countries (OPEC) is struggling to keep a constraint on supply. There is currently meant to be a deal in place between OPEC’s members to limit supply. The deals guidelines are being ignored and surplus oil is hitting the market which has resulted in considerable falls in oil price. With Canada’s heavy reliance on oil, this could have a significant impact on the Canadian dollar.
Canadian retails sales data is monthly data that shows all goods based on a sampling of retails stores of different types and sizes. It is an indicator of consumer confidence. The general consensus is there will be a slight contraction which could improve Sterling’s position.
Consumer Price Index (CPI) data is released following retail sales and is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. It is a key barometer for inflation. I think we could see a fall in inflation which could weaken the Canadian Dollar. Following these announcements may be a shrew time to buy Canadian dollars if you have to move short term.
For more information on how future data releases could affect your Canadian Dollar requirement, call our trading floor on 01494 725 353 or email me here.
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