Once more we are back in the 1.90’s after strong UK Gross Domestic Product figures were released stating that the economy had grown 0.6% in the first quarter of 2015, much higher than the expected 0.4%.
Markets were shocked, as the economic uncertainty of a general election, and record low inflation figures and trade deficits, all pointed towards low, or even lower than expected GDP figures. The turnaround shocked markets, and even though it was only 0.2% higher, because GDP is a measure of the overall strength of the economy, a small change makes a big difference. Sterling gained against all major currencies, and although GBP-CAD rates went as low as 1.88 today, we are back in the 1.90s. This has created excellent buying opportunities for CAD using Sterling as a purchasing currency.
Bank of England Governor Mark Carney will be speaking tonight at 8pm – this will likely cause significant volatility for GBP CAD rates as Canadian and American trading markets will still be open. Carney has traditionally tried to downplay the positive news on the UK market as a way to control the value of Sterling, and as a result our trade deficit (our goods are not as attractive to foreign buyers if the GBP required is too expensive). Those looking to buy or sell CAD if they are in the UK will have to wait until tomorrow morning now in order to secure live buying prices. I shall post before trading lines open tomorrow morning so that you can call in straight away on 01494 787 478 knowing exactly how strong the current buying prices are. firstname.lastname@example.org
There are renewed calls to install a free trade zone between the different Canadian provinces by Ottawan government representatives. Due to the low oil prices, an export Canada relies heavily on for revenue, the economy is being forced to diversify. There is a significant manufacturing boom currently being undertaken. Labour is plentiful and cheap due to cutbacks in the oil sector, and Canadian exports are more tempting due to the low value of the Loonie which lends itself well to a manufacturing recovery. This is why Ottawa is calling for a free trade zone.
Previously the individual provinces could ride their own oil revenues and hoard profits, discouraging cooperation as that simply invited competition between each state to drive down oil prices. But not cooperation is necessary to diversify and kick-start an economy which is starting to realise it relied too heavily on oil. This is another example that Canada is heading towards a stronger and more robust economy that can manage fluctuations in oil prices with greater ease. This kind of stability is looked on favourably by currency markets.
The internal situation in Canada is something we will be addressing regularly in this blog. Those consdering emigrating in the long term should know about these developments. Knowing that it is unlikely that rates will get as low as thing again once oil prices recovery, because Canada will have a stronger manufacturing base to deal with those sudden swings. If you are buying in a few years, do not budget for these rates.