- GBPCAD at a 2-week high
- Post-Brexit limbo provides support for Sterling
- Strong economic data eases anxiety
- Oil prices to remain below $50 according to Goldman Sachs
Pound to Canadian Dollar rates have shot up this week off the back of positive economic data for the UK. Whilst retail sales have provided comfort since the referendum, inflationary figures also appear to be less impacted which prompted Moody’s to improve their predictions for the UK next year.
It does however, remain a very sensitive period for the UK, and whilst markets wait for further signals of economic meltdown in the UK much of the attention remains on the new Prime Minister and the triggering of Article 50, which remains the biggest concern for businesses and investors in the UK.
I remain confident that Pound Sterling has time to recover some of its losses since the vote, as long as economic data continues to perform in the mean time, Sterling has time to stabilise before government trigger Article 50. Given that economic data lags behind major political changes, we may not see the impact of Brexit until after the new year.
In relation to GBPCAD, we have other factors that could impact rates in the near future.
Oil prices could fall further this year
Over supply, sanction-relief in Iran and oil supply disruptions in Nigeria, Iraq and Libya have all shown signs of easing since last week. Goldman Sachs have predicted that oil prices could remain below $50 until later next year.
With a market flooded with oil, prices could fall even further back to ranges of $40 a barrel. Given the Canadian economies’ reliance on oil exports, this could have negative implications for CAD.
If current conditions continue, I envisage GBPCAD exchange rates to move closer to the 1.75 mark within the next month, as long as there is no further news on Article 50.
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