The cost of a barrel of oil hit a 7 month low this week causing the GBP/CAD rate to finish the week a percent higher than the middle of the week. Sterling has suffered earlier in the week as Bank of England Governor Mark Carney dampened hopes of an interest rate hike in the near future. However the gains made by the CAD were short lived after the price of a barrel of oil started to slip.
The cost of oil dropped to $45 for the first time this year and experts are suggesting this could continue to fall towards $40 a barrel. The reason this is so significant for the Canadian Dollar’s value is oil is Canada’s biggest export. If Oil was to once again to slump the same as it did this time last year, there is very little opportunity for the CAD to gain. Furthermore an oil price crisis would also deter the Bank of Canada from considering an interest rate hikes.
In the short term the GBP/CAD is likely to revisit the 1.70’s in my opinion and over the longer term I can see the rate move towards 1.80’s. Sterling has been weak in the past few weeks following the election result but as the Brexit negotiations appear to be off to a positive start things may change. There are so many factors effecting the rates of exchange that monitoring the market and setting expectations will make sure you’re maximising your funds.
I am able to help you time and transfer, offering a cost saving solution for completing currency transfers. Working for an established brokerage I can set rate alerts and discuss forecasts to assist with your plans. If you would like to ask any questions with regards to an upcoming requirement please email me at [email protected]