Are GBP/CAD Rates Heading for 1.80? (Matthew Vassallo)

Pound to Dollar Rate Pushed Higher by Risk-on Mood

Sterling’s recent gains against the CAD have softened of late, with the Pound falling by over two cents in the past week.

With the pair now trading around 1.7650 a move through 1.80 is now unlikely in the short-term, with pressure building on the UK economy.

Brexit negotiation concerns and a poor run of economic data has put a halt on Sterling’s rise, with no guarantee that we will see a recovery in the short-term.

Whilst the Pound has no doubt found a foothold in the market, following the triggering of Article 50 and the subsequent decision by Prime Minster Theresa May to call a general election, it was unable to break through the 1.80 resistance barrier. This has become a key threshold for the pair and as such I would be wary about assuming the recent upward curve will just return unaided and I would look to protect the gains that have been made over the past month.

Whilst a cloud of uncertainty hangs over the UK economy, Canada has concerns of its own. This is due to the price of crude oil falling to a five-month low recently, which is likely to have a negative effect on Canada’s export driven economy. With Oil being their main export, any downturn has an instant negative effect on their economy and the CAD is likely to lose value as a result. The Loonie has also suffered of late due to the tariff introduced on Canadian lumber to the US and with three quarters of Canada’s exports heading to their nearest neighbours, any further tariffs could heap pressure on CAD.

Due to the CAD being a commodity based currency, it is heavily reliant on global growth and a such any upturn in the US & China, two of the globes largest economy can drive these currencies values up. This means that investors will look to GBP/CAD for example and see the opportunity to make more money on bigger market swings and thus, the pairs value can fluctuate quite substantially.

Oil prices have remained unsteady for months now and as such those clients holding CAD may wish to take advantage of the current market value and remove any uncertainty moving forward.

Those clients with a CAD currency transfer to make should be keeping a close on today’s latest Retail Sales & inflation data but based on the uncertainty surrounding both the UK and Canadian economies, my risk adversity on the pair remains minimal.

If you have an upcoming CAD currency transfer to make and would like to be kept up to date with all the latest market movements, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt.

Alternatively, I can be emailed directly on [email protected].