In today’s GBP to CAD forecast we look at what’s ahead for the currency pair. The Canadian dollar strengthened against most major currencies yesterday as oil prices recovered some of the losses we saw last week. Regular readers will be aware that Canada exports many commodities and oil is arguable the most important. If we continue to see oil prices rise in the upcoming days, I expect to see CAD continue to make gains against most major currencies.
Bank of Canada not expected to raise interest rates
Its not all positive news for the Canadian dollar as markets are not anticipating the central bank to raise interest rates next month even though annual inflation remained above the central bank’s target. All eyes will turn to this Friday’s GDP numbers. If GDP rises it could be the case that markets will rethink the chances of an interest rate hike before the Christmas festivities.
GBP to CAD forecast
In regards to GBP to CAD exchange rates, Brexit continues to be the main talking point. UK Prime Minister Theresa May has 2 weeks to persuade fellow Conservative MPs to back her Brexit proposal. The vote in Parliament is set for the 11th December and is expected to have a major impact on the future of GBP to CAD exchange rates for the upcoming years.
Over the last 4 weeks GBP to CAD exchange rates have fluctuated between 1.6650 and 1.7250, however I expect the support or resistance level for the currency pair to be broken once the Brexit vote is over. If it’s the case the PM finds support from her Party, my prediction is for the GBP to CAD rate to rise towards 1.75 in the short term and 1.85 in the mid term. However, if its the case Theresa May fails to get the backing from her Party, I believe her days will be numbered and one of many alternatives could happen. If this is the case I expect the GBP to CAD rate to fall to 1.60 in the short term and 1.55 in the mid term.
Latest UK Bank stress tests
In other news the UK will release their latest Bank stress tests alongside the Financial Stability report. The reports have the potential to have a major impact on GBP to CAD exchange rates. However with banks being more regulated by the day, I don’t expect the release to spring any surprises. Therefore I expect either sterling weakness or a non event.
To ask me any questions about my GBP to CAD forecast or to learn more about how Brexit could impact exchange rates and feel free to drop me a message using the form below: