Sterling’s recent gains against the Canadian Dollar have softened of late, with the Pound falling by over two cents in the past week. With the pair now trading under 1.76, a move through 1.80 is now unlikely in the short-term, with pressure building on the UK economy.
The table below shows GBP/CAD rate movement in the last month and the difference when transferring £200,000:
|Currency Pair||% Change||Difference on £200,000|
Brexit negotiation concerns and a poor run of economic data has put a halt on Sterling’s rise, with no guarantee that we will see a recovery in the short-term.
Whilst the Pound has no doubt found a foothold in the market, following the triggering of Article 50 and the subsequent decision by Prime Minster Theresa May to call a general election, it was unable to break through the 1.80 resistance barrier. This has become a key threshold for the pair and as such I would be wary about assuming the recent upward curve will just return unaided and I would look to protect the gains that have been made over the past month.
Whilst a cloud of uncertainty hangs over the UK economy, Canada has concerns of its own. This is due to the price of crude oil falling to a five-month low, which is likely to have a negative effect on Canada’s export driven economy. With Oil being their main export, any downturn has an instant negative effect on their economy and the CAD is likely to lose value as a result.
Due to the CAD being a commodity based currency, it is heavily reliant on global growth and a such any upturn in the US and China, two of the World's largest economies.
This means that investors will look to the GBP/CAD exchange rate for example and see the opportunity to make more money on bigger market swings and thus, the pairs value can fluctuate quite substantially.
Oil prices have remained unsteady for months now and as such those clients holding CAD may wish to take advantage of the current market value and remove any uncertainty moving forward.
Looking ahead and any clients holding CAD should be keeping a close eye on today’s Manufacturing Shipment figures. These give us a key insight into market demand for Canada’s exports, which as discussed, is a key component in their economy.
Then on Friday we have the latest Retail Sales figures and a host of inflation data, both of which are expected to show an improvement. This could help support further CAD strength, as we head into the weekend.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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