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GBP CAD Exchange Rate Softened as Oil Prices Surged on Hopes of OPEC Deal

Oil Price

Oil Production Cut Speculation Weighed Heavily on GBP CAD Exchange Rate

November’s GfK consumer confidence survey disappointed investors on Wednesday, leading the Pound (GBP) to trend lower as the index slumped from -3 to -8. This did not offer much encouragement over the resilience of the UK economy, seeming to point towards a weakening in consumer outlook ahead of the crucial Christmas shopping period. Investors were also discouraged by the Bank of England’s (BoE) latest Financial Stability Report, which offered a somewhat cautious view in light of the government’s lack of clarity over its Brexit stance.

Confidence in the Canadian Dollar (CAD), on the other hand, soared in response to speculation that the Organisation of the Petroleum Exporting Countries (OPEC) could be on the verge of agreeing an oil production cut. Hopes of an imminent deal prompted Brent crude to surge back above the US$50 per barrel mark, although this relatively fragile rally struggled to sustain itself for long.

As the third quarter Canadian Gross Domestic Product data bettered expectations, clocking in at 3.5% rather than 3.4%, the Pound Canadian Dollar (GBP CAD) exchange rate trended markedly lower during Wednesday afternoon.

GBP CAD Exchange Rate Forecast: Weaker Employment Figures Predicted to Dent Canadian Dollar

Friday’s Canadian labour market data could add some fresh downside pressure to the ‘Loonie’, though, with the net change in employment expected to clock in at -20,000. While this dip is not predicted to have any material impact on the unemployment rate it would nevertheless limit confidence in the strength of the domestic economy. Signs of a weakening labour market could encourage the Bank of Canada (BOC) to reconsider its current neutral policy bias, something which would diminish the appeal of the Canadian Dollar.

Volatility for the GBP CAD exchange rate is also likely in response to the latest raft of UK PMIs, which are expected to hold relatively steady on the month. Although any weakening in the manufacturing sector would discourage investors from buying back into the Pound, the most important measure remains the Services PMI. Providing that the main engine of the UK economy is shown to have held up in November then GBP exchange rates are likely to enter a fresh rally, offering further evidence of the limited impact of Brexit-based uncertainty at this juncture. Any downside surprises, though, could see Sterling return to a generally bearish trend.

Current Interbank Exchange Rates

At the time of writing, the Pound Canadian Dollar (GBP CAD) exchange rate was trending in the region of 1.67, while the Canadian Dollar Pound (CAD GBP) exchange rate was trending narrowly around 0.59.