GBP/CAD rates have breached fresh 8 year highs today – hitting 1.986 briefly on the markets before falling back down to 1.975 by the close of UK trading. This stunned market onlookers, and honestly it took a while for most of us to decipher why rates jumped up so high.
Firstly, oil prices tumbled and they are expected to tumble more, as Iran nuclear deal nears. Once the sanctions are lifted against Iran when they agree to halt their nuclear weapons program, prices are expected to fall further. With Canada’s economy already hurting badly by record low oil prices since the start of the year, the news further lowered confidence in the value of the CAD.
The ‘agreekment’ – an already popular term developed to state that a ‘grexit’ had been averted, is also a factor. However, most analysts expected the opposite for rates when this happened. GBP value has sky-rocketed with nervous investors flying out of the Euro into safe-haven currencies. Now that a crisis has thought to have been averted, investors should be humbly moving back to the Euro after realising they overreacted, bring back down the artificially inflated GBP/CAD rates.
So it seems markets actually believe that the proposal accepted by the Greek delegation will not be ratified by their parliament back home. They saw the details and were surprised that Alexis Tsipras agreed to many of the measures that the Greek people had already said no to in their referendum. Greece have until Wednesday to ratify the agreement in Parliament, and if the rates on show are anything to go by, this will not be a smooth process.
So those looking to buy CAD have been presented with excellent buying opportunities, and I think will continue to enjoy them until Wednesday at the earliest. To maximise the amount of CAD you can achieve while you are at the top of the market, email me overnight on [email protected]. Those looking to sell, while patience has not been paying off for you recently, few morday wouldnt hurt to see if the Greek situation becomes more volatile again and moves rates in your favour.