Canadian Dollar week-long gains

GBP to CAD Rate: Sterling Gains Against the Canadian Dollar Ahead of Bank of Canada Statement

The Canadian Dollar has had its most positive week in months, even with an election on the horizon which normally makes investors reluctant to get involved with the currency in question due to the uncertainty on its future financial policy.

The first boost was this weeks rise in oil price by more than 2.5% following the announcement of reduced drilling output for the US, as the prolonged low oil price has made their shale oil uneconomical to produce. As a major exporter the value of the Canadian Dollar moves very closely with any sharp changes in the value of Brent Crude oil.

The second spike was due to the very positive tones from Stephen Poloz, the Governor of the Bank of Canada, about the current stability of the Canadian economy. Now famously saying that the Canadian economy has weathered low oil prices and they can handle even lower, such a statement highlighted to markets the recent diversification of the Canadian economy to minimize its reliance on oil and the Canadian Dollar strengthened off the back of such optimism.

Data released on Wednesday then backed up his statement. The retail sector grew another 0.5% in August, which was its third month in a row where the figure climbed.

Finally, the comment made by Janet Yellen yesterday, the head of the Federal Reserve Bank of America, gave an element of certainty to an interest rate hike in the US. Stating that rates will rise before the end of this year ‘no matter what’ caused the USD to strengthen hugely against its currency pairings. Though USD/CAD spiked, the CAD did gain value by association with the US economy, and as a result, GBP/CAD and EUR/CAD both fell, and GBP/CAD is now at 2.02 – its lowest rate on offer this month.

A strong trend has been established this month, it shows little sign of abating, even with the election so close. But such events do cause significant volatility. These articles will continue to cover the election and what direction we can expect Canadian Dollar pairings to journey as well get closer to polling day. But movements have certainly benefited Canadian Dollar sellers in the short-term.

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