The Pound has recently risen by 0.5% against the Canadian Dollar, but this movement follows a prior crash in the GBP CAD exchange rate.
When an election poll suggested that there could be a hung parliament, the Pound lurched down against the Canadian Dollar from 1.7313 to 1.7231. Since then, Sterling has made a recovery, but only by virtue of another poll. The more recent stats suggested that the Conservatives could gain 48% of the vote, compared to Labour’s estimated 33%.
Wall Street Journal economist Mike Bird responded to these recent Pound fluctuations, stating that;
‘You don’t have an emerging market currency until it’s reacting to politics. Sterling [is] starting to move on opinion polls [and] projections again’.
Given this outlook, it seems likely that the run-up to the June 8th election will be dominated by wild GBP movement against the Canadian Dollar.
Based on previous patterns, Pound demand is likely to spike up if polls predict a Conservative win, but the reversal of such an outlook could have an opposite effect.
There are still a few interviews and Question Time sessions left before the election, so the Pound may still be shifted before hustings draw to a close.
The Canadian Dollar’s weakness of late has been triggered by crude oil prices. These are strongly influenced by decisions made by the Organisation of Petroleum Exporting Countries (OPEC).
Last week, OPEC heads failed to agree on expanding the level of oil cuts, instead extending existing cuts further into the future. This has severely weakened crude oil prices, sending them under the $50 per barrel mark to almost $48 per barrel.
Such has been the level of dissatisfaction about the oil price slump that even a forecast beating rise in Canadian GDP has failed to boost CAD demand.
The Canadian Dollar could advance in the future if crude oil prices consistently rise, but this could take significant effort on the part of OPEC members.
Speaking recently, Saudia Arabia’s Energy Minister, Khalid al-Falih, stated;
‘We want to institutionalise cooperation between OPEC and non-OPEC producers’.
Such an agreement could finally deliver the universal production cuts that oil producers crave, which may translate to larger cuts and rising oil prices.
Higher prices could trigger a CAD GBP exchange rate advance, but this will require a great deal of cooperation.
Recent Interbank GBP CAD Exchange Rates
At the time of writing, the Pound to Canadian Dollar (GBP CAD) exchange rate was trading at 1.7332 and the Canadian Dollar to Pound (CAD GBP) exchange rate was trading at 0.5765.
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