Bank of Canada Boost Canadian Dollar, But Oil Raises Concerns (Ben Fletcher)

Oil Prices and Brexit Casuing Volatility for Pound to Canadian Dollar Exchange Rates

The Bank of Canada raising interest rates yesterday helped the GBP/CAD rate fall to a 3 month low. However there are some concerns that may suggest the decision might be premature. The central bank have acted before the inflation level in Canada reaches the targeted 2% and with a interest rate hike there may be less spending, slowing inflation down.

The other main concern for Canada is the low forecast for oil over the next year. $40 a barrel is expected to remain for the considerable future and one of the reasons for the slowdown in Canada was oil’s price. Last year the cost of a barrel fell into the low 30’s essentially making huge amounts of oil production rigs unsustainable. If there was to be further drops in the price of oil that would have a significant effect on the future of the Canadian economy due to the fact it’s their largest export.

Where to Next for GBP/CAD

Moving forwards whilst there is considerable uncertainty surrounding Sterling Canadian Dollar sellers should consider cashing in over the next few weeks. There is unlikely to be any major movements in favour of Sterling in the short term however I find it hard to believe that the GBP/CAD rate will fall much lower towards the 1.60 level. Over the next few months there is more change in my opinion that the GBP/CAD will move further towards the 1.70 level.

If you have any questions with regards to my forecast above please don’t hesitate to contact me. I would be more than happy to discuss your requirement and provide a strategy that will work for your unique needs. I may also be able to offer a potential method of completing the transfer at some of the best rates available in the market. Please send me a brief description of what you’re looking to do at [email protected]