Brexit and oil prices driving factors behind GBPCAD rates

GBP to CAD Rate: Sterling Gains Against the Canadian Dollar Ahead of Bank of Canada Statement
  • GBPCAD exchange rates near a 3 year low
  • Positive inflationary data for UK provides little comfort
  • Loonie strength following upbeat oil prices
  • Rates likely to deteriorate further

Demand for Pound Sterling crumbles as Brexit uncertainty continues

The UK’s vote to leave the EU has done little to help Sterling in recent weeks, whilst the UK government plans its departure as some predict in 2017, very little reassurance from government has raised conspiracies as to when, if at all, Article 50 will be invoked.

Theresa May – British PM has attempted to reassure the public by ‘making a success of Brexit’, and as she discovered rather imminently, she has a number of hurdles to jump before she can even consider the official withdrawal from the single market. Not foremost, the legal implications that have now come to light in recent days, which some have stipulated as a potential blocking of Article 50.

Leaving the EU will be no easy task, decades of social, political and economical constructs need to be untangled whilst a need for positive relations with other remaining members needs to be maintained. And in the mean time, whilst we examine the implications of such a vote on the UK’s economy, Sterling bares the brunt of all the decisions that arise.

If the UK does leave the EU, it wont be for at least 2 years from the official acknowledgement of Article 50, the UK could remain in limbo until 2019. What impact will these decisions have on an already punished Pound?

Oil prices help to boost the Canadian Dollar

On one side we have Sterling weakness and on the other, a currency driven by the price of oil. Whilst prices remain low compared to the highs of last year, the parallel’s of Brexit and commodity currencies stretch into unknown territories. It’s difficult to imagine what rates would look like if oil prices were at the highs seen last year.

Oil prices hit a one month high on Monday, are prices likely to continue their uphill trend? Russia and Iran are flooding the markets with their supply of oil, demand for oil could therefore fall coupled with competitive prices. I am therefore expecting oil to peak and fall once again in the latter part of the year.

GBPCAD rates to fall to low 1.60’s

Oil prices will likely continue to climb in the very short term, this coupled with Brexit uncertainty could drive current rates to levels not seen in 3 years. I would therefore encourage CAD buyers to make the most of current rates. If you would like to find out the more about currency rates, or have questions as to how to transfer funds at the best rates possible, email [email protected].