The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate continued to trend higher during the rest of Tuesday’s trading ahead of Wednesday’s highly influential Bank of England (BoE) meeting minutes.
Moreover, the Pound will have plenty of opportunity to move during Wednesday’s session with the expected release of UK Unemployment Rate, Employment Change, Average Weekly Earnings, Claimant Count, and Jobless Claims Change.
The Bank of England (BoE) had forecast a drop in the UK Consumer Price Index (CPI) in coming months, suggesting that it had the potential to slip below 1.0%. However, Tuesday saw inflation fall to a 12-year low in November of 1.0% from 1.3% in October as the price of oil continues to ripple through the market.
However, Bank of England Governor Mark Carney has suggested that the fall in oil prices could be unambiguously positive for the UK. The fall in oil and fuel costs (which have declined by 5.9% in November) has given UK citizens more disposable income.
Liberal Democrat chief secretary to the Treasury, Danny Alexander, stated ‘Falling oil prices have helped push inflation to its lowest level since 2002. This is a welcome early Christmas present to millions of families across the country.’
Meanwhile, the Canadian commodity currency has suffered thanks to its largest export falling in value by almost 50% since June. Brent crude oil slipped below $60 a barrel, reaching the lowest level since July 2009.
However, a recent meeting by the Organisation of the Petroleum Exporting Countries (OPEC) saw producers maintain the current level of production, despite a surplus pushing prices lower.
Commodities analyst Bjarne Schieldrop commented: ‘This won’t stop until oil producers are on their backs. There will be better demand in the second half, hopefully some demand effects from lower prices, and definitely softer growth in US shale.’
However, with oil producing countries willing to see the price of oil drop into the $40’s, it seems as if low fuel prices could be here to stay.
Industry expert Olivier Jakob stated: ‘OPEC had scored an own-goal. Non-Gulf OPEC countries will participate against their will in the supply re-balancing of 2015. Venzuela will fall before the Bakken does.’
BoE Inflation Falls after Stress Test Highlights Failings – GBP/CAD Still Gains
Tuesday not only saw the release of falling UK inflation data, but also the latest Bank of England stress test results. The BoE put some of Britain’s largest institutions through a mock scenario to see how well they’d cope in the face of a fresh financial crisis.
The results showed some banks, such as the RBS and Lloyds, would only narrowly scrape through another crisis while the Co-Op failed to pass the stress test completely.
Governor Carney suggested: ‘This was a demanding test. The results show the core of the banking system is significantly more resilient, that it has the strength to continue to serve the real economy even in a severe stress.’
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to continue fluctuating on any developments in the price of oil, as well as Canadian data released later on Tuesday.
Canadian Manufacturing Shipments will be out in the North American session and could cause some small ‘Loonie’ movement.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has seen a market movement of +0.25% and is currently residing at 1.8282. The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is trending in the region of 0.5476.