Pound to Canadian dollar exchange rates have rallied this week after a sudden drop in the price of oil which fell by over 7% on Tuesday.
With global production presently increasing this is forcing the price of oil lower which is having a negative impact on the Canadian dollar which is a commodity currency. With the US now producing vast amounts of shale this is also helping to weaken the price of oil.
As Canada is a major exporter of oil a lower price is usually seen as negative for the currency. In this case the sudden and substantial drop lower has resulted in Canadian dollar weakness. Pound to Canadian dollar exchange rates have now pushed higher breaking over 1.70 for the pair and creating a good opportunity for those clients looking to buy Canadian dollars.
Inflation figures caused Canadian dollar weakness
The Canadian dollar also slipped lower after Canadian Consumer Price Index inflation numbers arrived weaker than expected at 1.7% which was lower than the 1.8% that was expected. The Bank of Canada has raised interest rates this year but the weaker inflation and concerns over oil could see a dovish policy coming from the central bank in the future. Expect new direction for Canadian dollar exchange rates as developments unfold.
To add to the list of worries for the Canadian economy it is has been suggested that Canada could be heading towards a recession in 2019. Whilst a new trade agreement USMCA has been agreed between Canada, Mexico and the US which replaces NAFTA it has taken a long time to get to this point which has left the economic outlook uncertain for some time.
Brexit uncertainty continues to affect the pound
Sterling exchange rates have been struggling in recent weeks as Brexit uncertainty continues to be the big driver for the pound. After a series of high profile Government resignations and the delayed meaningful vote on whether to push through with the agreed withdrawal agreement and political declaration, the pound has been on a much weaker footing. The delayed Parliamentary vote is now expected to take place 14th January 2019 and will almost certainly dictate the future direction for the pound. If the vote does not get through the House of Commons then the default option for Brexit will be a no deal and this is likely to result in considerable weakness for Pound to Canadian dollar rates.
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