Pound to Canadian Dollar forecast: Bank of England member provides a more dovish outlook, oil prices rise on Middle East tensions

Pound to Canadian Dollar forecast Bank of England member provides a more dovish outlook, oil prices rise on Middle East tensions

The pound to Canadian dollar exchange rate has been creeping down over the past few months, with the interbank level dropping from the mid 1.70s all the way down to the lower 1.60s at the time of writing this post.

GBP/CAD pairing close to 2 year lows: Investor concerns over Brexit

The pairing is closing in on a two year low, so anyone that has Canadian dollars to bring back into pounds is in a great situation as they will have gained roughly 7% over the past two months, which is a healthy return indeed!

There are a number of reasons for the drop in the pairing, with the most notable being concerns for investors over a ‘no deal’ Brexit and the problems that this may bring to the UK economy.

Oil prices rising due to Iran tensions, strengthening the Canadian Dollar

On the other side we have the Canadian dollar making gains against a lot of major currencies, and it is one of the best performing major currencies of the year to date, oil prices have been rising once again recently due to the tensions with Iran, showing gains of 2% + at points of the trading day yesterday.

With oil prices having a huge bearing on the Canadian economy due to the volume of oil exported this has been seen as a big positive for the Canadian dollar and this is why the currency has seen a surge of late.

Bank of England: What could happen to interest rates?

Yesterday during an interview with Bloomberg, Bank of England member Michael Saunders was a little less ‘hawkish’ or positive than he has been in his stance of late and the general view was that his strong optimism for further rate hikes, albeit limited and gradual may have dropped a little.

An interest rate hike is generally seen as a positive for the currency concerned, so another member looking less positive that a hike will occur can be seen as a negative for the currency in question.

With the unknown factor that is Brexit it is extremely hard for anyone to make any sweeping fiscal decisions in the near future until there is an understanding of which path the U.K will take so I feel that we may see the pairing come back further until we receive some clarity and progress.

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