The Pound Canadian Dollar (GBP CAD) exchange rate rallied this morning after negative market sentiment caused the value of Sterling to plummet yesterday afternoon.
Pound (GBP) Canadian Dollar (CAD) Recovers from QE Speculation
Sterling briefly fell by around a cent against the Canadian Dollar yesterday afternoon as traders reeled from the news that British Chancellor Philip Hammond would be willing to allow the Bank of England (BoE) to implement further quantitative easing if it felt it was required.
The Pound recovered quickly later that afternoon as BoE Governor Mark Carney avoided commenting on whether the BoE was planning any additional economic stimulus during his meeting with the House of Lords.
Investors are likely to remain wary however as ‘Brexit’ uncertainty continues to dominate market sentiment. Geoffrey Yu, Head of the UK Investment Office at UBS Wealth Management, weighed in on Sterling’s increasing connection to political movements;
‘We cannot underestimate the central role that politics has played in Sterling’s fate up until now. With the terms and conditions of the UK’s future trade links still unclear it is too early to rule out further downside risks in Sterling.’
Canadian Dollar (CAD) Pressured as Doubts Mount around OPEC Deal
The Canadian Dollar struggled to take advantage of the Pound’s recent tumble as investors increasingly fear that a potential OPEC deal to curb global oil production is dead causing the value of crude to fall.
Recent reports that Russia is against OPEC oil cuts has cast further doubts on the possibility of the deal following Iraq’s desire to be exempt from the production cuts over the weekend.
Crude oil is a key export for Canada which caused the ‘Loonie’ to slide as prices dropped.
GBP CAD Forecast: Pound May Rise Further if UK Growth Improves.
The Pound to Canadian Dollar exchange rate may advance further on Thursday if the UK’s third quarter GDP report shows any improvement on forecasts that it will hold at 2.1% on the year. That being said, its effects could just as likely be muted by ‘Brexit’ movement as Sterling increasingly ignores domestic data releases.
CAD is likely to remain chained to the price of oil for the remainder of the week as Canadian data dries up.
Current Interbank Exchange Rates
At the time of writing the GBP/CAD exchange rate was trending around 1.63 and the CAD/GBP exchange rate was trending around 0.61.
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