The brutal attacks in Paris before the weekend have seen oil prices rise slightly, with traders speculating over the impact of military intervention in the Middle East.
GBP/CAD Exchange Rate Trends Down with UK Housing Bubble Fears
While the Canadian Dollar has been boosted by rising oil prices, Pound Sterling has been hit by fresh fears of a UK housing bubble. The Rightmove House Price index rose 6.2% Year-on-Year this month, even though Month-on-Month prices saw a -1.3% fall. Concerns over a property bubble rose further when UBS put London at the top of its ‘real estate bubble index’ and Lancaster University academics released research suggesting the capital was on track for a housing bubble in 2017.
Not everyone agrees that the market is heading towards a bubble. Pete Redfern, head of Taylor Wimpey, dismissed the fears, stating, ‘While the market has been healthy, it’s not taken off as it has in previous years, it’s more sustainable. We’re not saying the housing market is not cyclical but the cyclicality seems more muted. It’s a good market, not a rampant one.’
The GBP/CAD exchange rate is currently trending down -0.2% in the region of 2.0225.
CAD/GBP Exchange Rate Rises as Risk of Military Intervention in Middle East Causes Oil Price Increase
In recent months the Canadian Dollar has been pushed low by the continued drop in oil prices, with levels under US$50 per barrel for longer than during the height of the global financial crisis between 2008 and 2009. Oil accounts for over 27% of Canada’s total exports so predictions that prices will remain low into 2016 as the oversupply continues have kept the ‘Loonie’ low.
However, the tragic attacks in Paris on Friday have caused a slight rise in oil prices, as many speculate over the impact that military intervention in the Middle East could have on the global supply. Many countries, including France and the United States, have committed to do more to combat extremism in the region. As a result Brent oil prices have experienced a slight rise.
While speculation over the future of military intervention in the Middle East has seen a rise in prices, many analysts believe it is unlikely to directly affect oil prices unless specific events occur. ‘The well-supplied crude market, record-high inventories in OECD (countries that are part of the Organisation for Economic Cooperation and Development) and lack of a material threat to the oil facilities in the Middle East from the military escalation against IS in Syria are going to prevent geopolitical premiums building in oil prices,’ explained BMI Research.
The resulting speculation over oil supply has seen the CAD/GBP exchange rate trending up 0.2% between 0.4929 and 0.4945.
GBP/CAD Exchange Rate Forecast: Core Consumer Price Index Could See Pound Sterling Appreciate
Oil prices are likely to fall again as concerns over the impact of intervention in the Middle East on the global supply are eased. This will see the ‘Loonie’ fall again, giving Pound Sterling the opportunity to appreciate following a minor rise in the Core Consumer Price Index. With little data out until Thursday, when UK Retail Sales are released, the GBP/CAD exchange rate could experience little movement.
The GBP/CAD exchange rate is currently trending between 2.0197 and 2.0266.
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